Omnichannel strategies factor into store-based retailers’ holiday optimism
November 23, 2016 03:18 PM
Store-based retailers generally are optimistic about the upcoming holiday season and will focus on omnichannel strategies and electronic communication as important ways to move goods, according to recent reports.
One such report, from Jones Lang LaSalle (JLL) Inc., a professional services and investment management company specializing in real estate, concludes that consumers this year will spend more on holiday gifts than ever before. JLL says it expects overall sales—including online and in stores—to rise 4% year over year. By comparison holiday retail sales increased 3.2% in 2015.
The report, which is based on a survey of 300 retail tenants of JLL-operated shopping centers in 17 states and nearly 2,800 shoppers at 31 shopping centers, also finds:
- 46.4% of the retailers are offering the same deals online that they do in-store.
- 60% of store-based retailers will offer email or text message discounts this year
- 42.5% are giving away a gift with a purchase this holiday season.
- 77.3% of retailers say they believe foot traffic at shopping centers will stay the same or increase compared with last year.
- Among consumers, 72.6% say they will spend the same amount or more on holiday gifts this season than last year.
Greg Maloney, Americas CEO for JLL’s retail group, attributes the positive outlook to several factors, including economic growth, a rising stock market and relief over the end of what has been a contentious presidential election. He says past experience shows that year-over-year retail sales generally pick up in the holiday seasons following presidential elections. The total increase this year, he says, could be as high as 4.5%.
The University of Michigan’s monthly Index of Consumer Sentiment for November, released Wednesday, bodes well for retailers as consumers expressed greater optimism about their personal finances and improved prospects for the national economy, chief economist Richard Curtin said. The index jumped 6.6 points to 93.8 in November from 87.2 in October, for a 7.67% increase. Year over year, the November index rose 2.5 points or 2.7%, according to the survey.
JLL’s Maloney says traditional retailers increasingly embrace omnichannel strategies that better integrate physical and online operations. He expects that to continue and for the distinction between online and store sales to continue to blur.
Data released in early October by the International Council of Shopping Centers underscores the importance of the omnichannel idea. According to the council, 39% of holiday shoppers plan to buy products online and pick them up in stores, up from 32% in 2015. The ICSC also says 91% of holiday shoppers plan to spend money at physical stores this holiday season. Add in holiday shoppers who will spend online with retailers that have a physical presence and that total increases to 96%, according to the council.
The ICSC also finds that 85% of holiday shoppers will research goods online before making holiday purchases in a store, and 83% expect to make additional in-store purchases when picking up their online orders.
The ISCS predicts a 3.3% year-over-year growth in retail sales at physical stores this holiday season, compared with a 2.2% increase in 2015.
Retailers aggressive about omnichannel
Among the big retailers aggressively pursuing omnichannel strategies are The Home Depot Inc., J.C. Penney Co. Inc. and Target Corp.
At Home Depot, No. 7 in the Internet Retailer 2016 Top 500 Guide, more than 40% of online orders were picked up in stores during the third quarter ended Oct. 30. Home Depot also continues to roll out its “buy online, deliver from store” system, which allows customers to buy something online and schedule delivery from a local store, similar to how they would set up delivery for an in-store purchase. The option is now available at about 1,600 stores, up from about 700 at the end of the second quarter ended July 31. Home Depot has 2,275 stores in the United States, Canada and Mexico.
Similarly, J.C. Penney, ranked number 33 among the country’s Top 500 web merchants,says consumers picked up nearly 40% of JCP.com orders at a local store in the third quarter ended Oct. 29. The retail chain didn’t have buy online, pick up in store capabilities on a chainwide basis until earlier this year.
Target (ranked No. 22 in the Top 500) has said consumers who order online and request in-store pickup account for 15% of Target.com’s order volume.
57% of respondents to an Internet Retailer consumer survey conducted in August said they had picked up an online order in a store. Of those, 73% said they did so to avoid shipping fees. The second most common reason was convenience, with 32% of respondents saying that the store was nearby and it just made sense to pick it up.