PwC: Mobile devices will drive 10% lift in overall holiday spend

NEW YORK - Holiday spending is expected to reach its highest point since the Great Recession, increasing 10% compared with the 2015 holiday season to an average of $1,121 each, according to PwC's 2016 Holiday Outlook released Tuesday. And consumers with annual household incomes less than $50,000 will likely increase their percentage spending levels even more than consumers overall.



However, this isn't all good news for store-based retailers, as consumers stated they increasingly prefer to receive gifts of travel and entertainment rather than traditional gifts. The silver lining for retailers, though, is digital sales are expected to increase 25%. And consumers are moving towards smaller devices to carry out their online shopping, with mobile shopping up almost 25%. From scouting products and monitoring deals to paying for products and tracking packages, shoppers are going mobile and that increase in mobile shopping means retailers are boosting their investment in digital channels.



Additionally, Gen Z, who now represent the largest U.S. demographic, are heavy mobile users and they're looking to buy tangible gifts more than experiences. At 86 million strong, Gen Z's influence is indisputable in the proliferation of interactive digital content, especially mobile video. These social media whiz kids are tactile; they like stuff – unlike millennials who prefer experiences. Reviews from actual product users appeal to them while ads don't.



"The great news for all retailers is consumers are much more optimistic this holiday season," stated Steven Barr, PwC's U.S. retail & consumer leader. "They are expected to spend 10% more on gifts, travel and entertainment. But it's not all good news for store-based retailers because shoppers are expected to increase their digital shopping by 25%. They have also indicated they plan to shop at fewer physical stores as they concentrate their digital shopping to fewer web sites," he said. "The clear winners will likely be the major dot com destinations, including select store and leading brand web sites."



One challenge for store-based retailers will be their success in leveraging their distinctive advantages to stay relevant, Barr added. "Small, independent retailers and local artisans are expected to compete for consumers by offering personal service as well as unique and hand-made gifts," he said. "And, the larger format retailers are expected to provide the services and value that matter most to shoppers – including knowledgeable store associates, speedy check-out options, well stocked stores and great prices."



Some 60% of retailers indicated they will provide both free shipping and free returns this holiday season – a must-have for consumers. Retailers are offering a variety of online and in-store ordering and delivery (or pick-up) options to provide the optimum mix of convenience, price, speed and variety.



Brands matter to 80% of the survey respondents – whether established household names, local businesses, independent retailers or new entrants. Almost 75% of consumers plan to shop locally while 56% will seek independent retailers.



And pet owners – almost half of all households nationwide – are expected to buy gifts for their animal companions. They will likely spend an average of $62, although millennials will likely outspend everyone else at $81 each.