The holiday shopping season will officially kick off at the end of this month, and shoppers will be gearing up to score some major deals. The stronger US economy, higher e-commerce sales and earlier store openings on Thanksgiving will boost retail spending during the upcoming holiday shopping period. Total spending over this year’s Black Friday weekend is forecast to rise 1.8% to $36.7 billion. The biggest contributor to holiday spending growth will be online sales, as Cyber Monday revenue growth reaches double digits for the fifth consecutive year. Meanwhile, Americans will spend an estimated $8.4 billion this year on Thanksgiving food and drinks, gifts and decorations, reflecting a 1.7% increase from 2013.
Celebrating the year-end holidays with loved ones remains an important tradition formany Americans, and as a result, Thanksgiving spending is anticipated to grow 1.7% to $8.4 billion in 2014. About two-thirds of households’ Thanksgiving budgets will be spent on food and drinks for family gatherings and festivities. The price of a typical Thanksgiving dinner, which includes turkey, stuffing, sweet potatoes, vegetables and pumpkin pie, is expected to increase 1.5% in 2014 to $5.7 billion. The average household will spend $46.38 on Thanksgiving dinner, with about 43.0% of the total cost of the meal gobbled up by turkey. Spending on other nonfood items, such as greeting cards, gifts and decorations, is anticipated to grow 1.7% over 2014. The improving economy and recent strong job growth will encourage higher discretionary spending this year, boosting retailers’ fortunes.
Spending during Black Friday weekend, which includes Friday, Saturday and Sunday, is anticipated to grow 1.8% to total $36.7 billion in 2014. The bulk of weekend purchases (35.8%) is expected to be made on Black Friday itself, despite the increased prominence of Cyber Monday in recent years. This year, Black Friday is projected to generate $13.1 billion in revenue, an increase of 1.6% over last year’s total. Although 2013 marked the first decline in Black Friday spending since the recession, lower unemployment and higher wages will likely lead to a jump in spending in 2014. Many still-wary consumers are focused on paying down debt and boosting their savings, leading to slow growth in overall spending. However, consumer electronics and apparel will remain popular items for consumers to purchase at a discount. Self-gifting is expected to be a major trend in 2014, as people take advantage of Black Friday retail promotions to purchase items that they have been holding out for during the year. Millennials will be the biggest self-gifters in 2014, as they have less disposable income and are more reliant on discounts.
Armed with thicker wallets, many consumers will begin shopping even as their bellies are full of turkey this year. An increasingly competitive retail environment will lead to earlier store openings; many sales will commence as early as Thanksgiving afternoon. To capture consumers’ first purchases, department stores Kohl’s Corp and Macy’s will both open their doors at 6 p.m. Thanksgiving evening, two hours earlier than last year.
Cyber Monday sales are again anticipated to rise sharply, reflecting a continued shift away from physical stores. Although Cyber Monday only accounts for 16.7% of revenue compared with Black Friday, it is forecast to record double-digit growth of 15.0%. The $2.2 billion-shopping day has increasingly made its way to the top of shoppers’ preferences for its plethora of online deals and free-shipping promotions. More than half of all consumers are expected to do some holiday shopping online. Mobile devices will be the most important e-commerce channel, as consumers spend over half their time interacting with retailers on a smartphone. Retailers have invested heavily in improving mobile-optimized websites to accommodate young consumers that want easy-to-use mobile sites.