Christmas Gift Market Hits a Wall and Settles into a ‘New Normal’
‘Black Friday’ is bleeding red as the 4Q no longer gets the lion’s share of retail sales
May 21, 2015 —Conventional wisdom in retail is that on ‘Black Friday,’ the day after Thanksgiving, the bottom line of retailers’ account books goes from red ink to black as annual losses turn to profits. It might have been true once, but not anymore, according to a new report on the gifting market from Unity Marketing.
Retailers can’t wait until the fourth quarter any longer to make their money, as shoppers behavior has changed. Back in 1995, nearly one-third of the typical retailer selling gifts was generated in the last three months of the year. In 2014 it had dropped to 29.4% The fourth quarter is not the money maker it once was for retailers.
“The incredible build up retailers make around the Christmas holiday shopping season is no longer paying off. Yearly retail sales quarter-to-quarter are flattening out and retailers’ chance to sell to the gift giver isn’t an end of the year opportunity any longer, but one that extends throughout the entire year,” says Pam Danziger, president of Unity Marketing and author of the new Gifting Report, based upon a survey among 1,650 gift shoppers (avg. income $97.9k).
Unity Marketing estimates that the gifting market totals $131.3 billion, and represents about $1 out of every $10 spent in the type of stores that fill America’s malls and shopping centers, the‘big boxes’ that line the streets and highways and the shops along main streets across the country. And increasingly, more of those gifting dollars are not going to those stores at all, but being spent online, as gifters turn to the internet to select, research and buy gifts.
Christmas gifting settles into ‘new normal’
The new study reveals that gifters spent an average of $1,851 on gifts and gift wrap, cards and other gifting accessories in the most recent year. Approximately 45% of that spending went toward buying Christmas gifts, down from 48% in 2009. Further spending on Christmas gifting after rising in 2012, settled back to 2009 levels last year.
“For Christmas 2015, we don’t expect to see much change,” Danziger explains. “Some 70% of gift shoppers expect to spend the same on gifts in 2015 as they did in 2014, which doesn’t bode well for 4Q2015. Retailers will need to pull some real magic out of their hats to get gift shoppers excited and spending this coming holiday season.”
While Christmas gift spending was flat from 2009 to 2014, overall spending on gifting increased 6.4%, meaning the opportunity for retailers to grow their share of the gifting market largely rests on attracting gift shoppers throughout the rest of the year, for other holidays and gifting occasions like birthdays, anniversaries, weddings, and so on.
Unity Marketing’s new gifting report provides data, insights and a five-year perspective of trends into what gifts people are shopping for by holiday and occasion, the destinations they favor for gift shopping, as well as what they look for when considering gift selections and places to shop. In addition, a new section of the study was devoted to how gifters use the internet in planning their gift purchases, researching prices as well as where to buy, and ordering online. “Internet shopping for gifts is a real game changer that is disrupting the gifting market, having replaced discount department stores and mass merchants, including the websites of stores like Target, Walmart, Kohl’s and others, as their preferred gift shopping destination.”
Danziger concludes, “While the annual year-end holiday gifting season receives the lion’s share of marketer and retailer attention when it comes to the gifting market, the reality is that gifting represents a significant marketing opportunity throughout the whole year. Out of the typical gifters’ annual gifting budget, Christmas accounts for slightly less than half of the total. The majority of gift purchases are made at other times of the year.
“A major finding in this study is that the gifting market is an important marketing opportunity throughout the year, not just during the traditional Christmas season. This report details an important trend for retailers and marketers to comprehend and use to plan year-round gifting strategy.”