Booz & Company’s Holiday Retail Outlook 2012 provides an advanced look at the consumer’s projected mind-set and behaviours in the next few months. The study, based on a 1,600-person pool, provide insights to retailers about what shoppers will buy and how they will buy it, this holiday season. Learn more: http://www.booz.com/global/home/what_we_think/reports_and_white_papers/ic-display/51019678

1. Briefing Nicholas Hodson
Karla Martin
Christopher Perrigo
Thom Blischok
Holiday Retail
Outlook 2012

2. The back-to-school season is behind us and retailers’ attention is turning inexorably to
the holidays. Booz & Company’s Holiday Retail Outlook 2012 offers some insights into
the consumer’s mind-set and expected behaviors this holiday season and provides advice
to retailers on adapting to these market trends.
Our insights are based on a survey of a 1,600-person informal panel composed of regular
consumers, store staff, and retail and consumer executives, as well as more than 150
interviews carried out in stores, malls, and airports during August–September 2012.
Because the economy is still sputtering, overall retail sales this holiday season are likely
to be flat or only slightly up. However, our research shows several distinct trends in
consumer mind-set and behavior in terms of what shoppers are likely to buy and how
they will buy it. We will take each in turn and then discuss the implications for retailers
more broadly.
CONSUMER MIND-SETS
• Overall, consumers will remain very cautious—52 percent will closely consider
affordability in their shopping decisions (the number is even higher for lower-income
demographics).
• Consumers are seeking deals and anticipate finding them: 73 percent of consumers
expect to find great deals this season (up from 62 percent last year).
• There are signs that consumers are tiring of the ongoing “misery index.”
- Fifty-three percent intend to buy at least one luxury item (up from 41 percent
last year).
- Consumers seem to be looking forward to the holiday season more than they did
last year. Fully 61 percent expect to get together with family this year (up from
54 percent last year), and they are looking forward to throwing more parties: 53
percent expect to host multiple gatherings for family, friends, and neighbors (up
from 45 percent last year).
- A popular theme for holiday celebrations will be “I’m Still Standing”: 51 percent
report that economic survival is a great reason for celebrating this year.
CONSUMER PURCHASES
• In terms of consumer purchases, we expect home entertainment and apparel to be hot
categories while electronics may fade slightly.
- Sixty-two percent of consumers do not have consumer electronics items at the top of
their personal wish lists, apparently because at least some demographic groups are
approaching high-tech saturation. Not surprisingly, for those who are hoping for
electronics, tablets and smartphones top the list.
- Home entertainment should be strong; 62 percent of respondents report that
they will be shopping for these items. Hardware (e.g., sophisticated home theater
equipment), accessories, and media are all on people’s lists. And 3-D movies may
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3. finally break through into the living room, as a wave of superhero movies hit the
stores and meet up with 3-D TVs acquired over the last year.
- Apparel looks set to grow at a healthy rate this season: 42 percent of consumers
report that they intend to buy apparel items as gifts (up from 37 percent last year).
Anticipating sales and discounts, however, consumers tell us that they plan to buy
later than last year—i.e., well after Black Friday.
- Downloadable gifts will become a distinct and rapidly growing category this
year. E-books, iTunes music downloads, and movies will all feature strongly.
“Virtual goods” have clearly become an acceptable gift for many (for both giving
and receiving). More than 45 percent of shoppers expect to give at least one
downloadable gift this year—and they don’t even need wrapping! With more
parents buying Kindles and Apple products for ever-younger children (age 10 this
year versus age 12 last year), digital media sales look to remain healthy post-
holiday as well.
- Gift cards will be a huge category again this holiday season—more than 80 million
shoppers plan to purchase gift cards this year, about 4 percent more than last year.
CONSUMER BUYING BEHAVIOR
Turning to how consumers will shop, bargain seeking will, unsurprisingly, dominate their
behavior. Private-label goods (whether in electronics, apparel, or groceries) will see strong
growth as consumers seek greater value for their holiday dollar.
Consumers are increasingly viewing Black Friday as irrelevant: They start looking earlier
and buying later, and are moving online. As a result, retailers are discounting even earlier,
seeking to convert these early shoppers. But as always, some shoppers will leave making
purchases until the last minute; in fact, we estimate that some 25 million shoppers will hit
the stores on Christmas Eve, a 9 percent increase over last year, anticipating even better
last-minute deals.
Showcasing—browsing in a store before buying online—will be a major challenge
for bricks-and-mortar retailers this year. We found that 40 percent of consumers now
describe showcasing as their shopping strategy. For that matter, multichannel shopping
in various combinations (research online but buy in store, buy online for pickup in store,
etc.) is sure to be the dominant consumer path to purchase this year.
Regifting is a final trend that is hardly retail at all but could have a significant impact
on retailers. Sixty-one percent of consumers say they have “learned to live with less”
(up from 53 percent last year), and one tactic that they now see as socially acceptable
is regifting. In fact, 32 percent of shoppers are currently considering giving an as-yet-
unused gift to someone else this season. Thirty-one percent of shoppers view this as an
acceptable form of gift giving (versus 25 percent last year). Of course, most consumers
will ensure that their “regift” is appropriate for the lucky recipient, and many will
consider appending a low-cost accessory or fresh packaging to make the gift appear new
or personalized—or, perhaps, to salve their conscience!
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4. IMPLICATIONS FOR RETAILERS
The good news is that in apparel, electronics, and other consumer durables, shoppers are
buying again, albeit cautiously and through a remorseless and technology-enabled value
lens. The biggest challenge this season for bricks-and-mortar retailers in these categories
is how to drive more than their fair share of “showcasing volume” to their own websites
(rather than Amazon.com or another competitor). Improved shopper confidence doesn’t
do you much good if your stores are just a showroom for someone else ultimately
capturing the sale.
What can a retailer do to capture that in-the-moment sale in the store or drive the
consumer to its own website rather than a competitor’s site? This is a formidable
challenge, and the retail industry as a whole is struggling to find answers. Here are some
of the best practices we see already in place for this holiday season:
Multichannel Retailing
Expect most or all of your customers to be simultaneously browsing in your store and
on their smartphone. Develop seamless digital and physical experiences to exploit this
dynamic, because shoppers will expect it. Make your digital experiences so compelling
that your customer never feels the need to check out your competitors. For example:
• Augment shelf labeling with QR codes for further product information, comparisons,
reviews, etc.
• Use QR code–driven promotions to convert the sale. For example, let consumers scan a
code to have items shipped to their home immediately at no charge.
• Offer links (URLs, QR codes, promotional incentive codes, etc.) and other “buy-it-
now” promotions to turn browsers into buyers and drive customers in your store
to your website. Give them incentives to convert immediately instead of going to a
competitor.
• Capture information on your customers as they browse in-store (for example, through
mobile apps linked to your loyalty program), then ping them a day or two later with a
“too good to miss” promotion that will increase your chances of conversion.
• Refresh your return and fraud policies to ensure that your customers can return items
bought online to the store.
• Consider free shipping on targeted items or basket sizes, because shoppers are
increasingly savvy about their all-in costs. Last holiday season, free shipping was a
major driver of online sales, and we expect more of the same this year.
• Use “we match online prices” messaging on the items most likely to drive overall
price perception.
• Use loyalty points (many retailers have proprietary loyalty schemes now) to drive
conversion (e.g., “earn double points if you buy today in the store, triple points if you
place an order online within 24 hours”).
• In apparel, increase your chances of “buy it now” conversion by making sure your
fitting rooms are clean, organized, and staffed with your best people. An enjoyable
fitting room experience nearly always turns into a purchase.
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5. To make sure you give shoppers a seamless multichannel experience this holiday season,
invest in preparing your online and mobile technology platforms for high volumes.
Online shoppers are quickly discouraged by slow websites and apps that crash. Finally,
ensure that your sales associates are intimately familiar with both your website and
any mobile offerings that you may have (such as apps) so that they can help customers
navigate between your channels in real time. In a multichannel world, nothing alienates
a consumer more than a blank stare from a salesperson in response to “Well, on your
website it says…”
Regifting
Regifting is a potentially damaging trend that could hit retailers hard. We see two
possible strategies for persuading frugal customers to spend with your brand/banner:
• Resist the Regift: Emphasize what is new and different about this year’s product,
compare and contrast features (especially in electronics) or style and trim (in apparel).
The online environment provides a great forum for providing this kind of information
to consumers to help them choose the latest upgrade.
• Embrace the Regift: Accept regifting as a phenomenon and concentrate on selling
accessories that add some novelty and help the giver feel good about the gift he or she
is offering. In apparel, this could actually take a subtle form of “updating last year’s
looks,” ostensibly aimed at the owner of last year’s knitted top but actually aimed at
the surreptitious regifter.
Grocery
In grocery, we anticipate an increase in parties or other “major cooking events”—a trend
no doubt viewed with some trepidation by the lead cook in the household. Grocery
retailers can help these home cooks “innovate” their large family meals with interesting
new side dishes and desserts as well as labor-saving ideas like ready-washed/cut meal-
assembly ingredients. Also provide ideas that the exhausted cook can use between the
major celebrations (including creative recipes for using leftovers) to provide further
opportunities for family togetherness.
The last year or two has seen a tremendous expansion in farmers’ markets as a source
for fresh groceries in particular. The local supermarket can respond to this trend over the
holidays by hosting a holiday market out in front of the store (perhaps in a heated tent in
cold climates), thus attracting customers, building community spirit, and emphasizing the
local store’s role in a successful and happy holiday season.
CONCLUSION
Although retailers must consider economic uncertainty and significant technology-
driven changes to the shopping experience as the holiday shopping season approaches,
our research indicates that there is room for optimism as compared to this time last
year. Consumers are becoming more innovative and cautious with regard to spending,
but many also seem focused on celebrating with friends and family—and giving thanks
for economic survival. They will shop this year, but with a value-seeking mind-set, and
with different tactics for finding deals and achieving quality for the money they spend.
Retailers that recognize these shifts in behavior and tailor their holiday strategies to meet
consumers’ new needs are the ones most likely to succeed this holiday season.
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6. Booz & Company is a leading global management
consulting firm focused on serving and shaping the
senior agenda of the world’s leading institutions.
Our founder, Edwin Booz, launched the profession
when he established the first management consulting
firm in Chicago in 1914. Today, we operate globally
with more than 3,000 people in 58 offices around
the world.
We believe passionately that essential advantage lies
within and that a few differentiating capabilities
drive any organization’s identity and success. We
work with our clients to discover and build those
capabilities that give them the right to win their
chosen markets.
We are a firm of practical strategists known for our
functional expertise, industry foresight, and “sleeves
rolled up” approach to working with our clients.
To learn more about Booz & Company or to access
its thought leadership, visit booz.com. Our award-
winning management magazine, strategy+business,
is available at strategy-business.com.
Authors: Media Contact:
Chicago New York
Christopher Perrigo Siobhan Ford
Senior Executive Advisor North American Marketing Manager
+1-312-578-4692 +1-212-551-6234
christopher.perrigo@booz.com siobhan.ford@booz.com
San Francisco
Nicholas Hodson
Partner
+1-415-627-4276
nicholas.hodson@booz.com
Karla Martin
Partner
+1-415-263-3712
karla.martin@booz.com
Thom Blischok
Senior Executive Advisor
+1-415-627-4213
thom.blischok@booz.com
©2012 Booz & Company Inc. Booz & Company