The Shape of Shopping in 2016: Holiday Shopping Trends Inform the Coming Year

We’ve made it through that time of year again, when consumers struggle to manage busy schedules, tightening budgets and the pressure to bolster holiday memories with the perfect gift. For the trend watchers among us, the holiday season also turns out to be the most wonderful time of year to gain some insight into current shopping behaviors. How were shoppers shopping this season, and what can that tell us about the year ahead?
A rise in online (and mobile) shopping
It’s not surprising that e-commerce is continuing to grow its share of the shopping experience, with mobile’s role increasing. According to the IBM US Retail Black Friday report, more traffic was generated from mobile devices than desktop on Black Friday, driving a 30% increase in sales via mobile devices compared to the previous year. Cyber Monday told a similar story; Adobe data showed that 49% of shopping visits could be attributed to mobile devices. This is both an opportunity and challenge for retailers; they’ll need to ensure their properties are optimized to engage and convert mobile users while also exploring new incentives to drive traffic to brick and mortar locations.
Shopping starts earlier; fragments
And while Black Friday and Cyber Monday have long served as the groundhog-like indicator for holiday sales, there are signs of a shift. A Google/Ipsos Media CT study indicated that shoppers are starting earlier; in 2014, 61% began gift research before Halloween and 48% completed shopping by Cyber Monday. This may be a reflection of increasingly fragmented shopping driven by m-commerce; the same study showed that marathon shopping excursions are giving way to spare time shopping on mobile devices. In 2016, retailers will need to employ year-round top-of-mind strategies in order to capture more of those shopping moments.
What we’re buying
There was no shortage of buzzworthy gadgets in 2015, but did that buzz translate to sales? While there are some discrepancies in the estimates around Apple Watch’s overall sales, recent data from Best Buy stated that customers purchased twice as many wearables this year compared to the 2014 holiday season. That 100% increase is notable, but also suggests that the true Wearable Revolution has been postponed until at least 2016.

This post is sponsored by Samsung. All thoughts and opinions are my own.
Meanwhile, other gadgets experienced a few bumps in the sleigh ride leading into the holiday season. Citing safety concerns, the Federal Aviation Association established a registration policy for drone owners, for which non-compliance could result in a fine. Hoverboards (more accurately known as “self-balancing scooters”) aimed for explosive holiday growth, but some were removed from shelves as it became evident that the self-balancing scooters were at risk of, yes, exploding. While both still made a strong presence under the tree, both Adobe and IBM’s data showed that Samsung TVs ranked as the most popular purchase on Black Friday 2015.
The wallet goes mobile, sort of
Consumers had multiple point of sale payment options to choose from this holiday season as the mobile wallet wars heated up. Despite the intensity of the battlefield, however, a study from InfoScout showed single-digit activity in this area. Credit cards, in comparison, accounted for 79% of in-store payments, making mobile payments another entry into the “maybe next year” category. Noting that younger generations will drive growth in this area, eMarketer projects a 210% increase in mobile payments in 2016.
Social commerce debuts
The pressure to monetize social media is on for both brands and platforms, and so 2015 saw a push for social commerce. Designed to usher social networkers down the path to purchase, Facebook, Twitter, Instagram and Pinterest promoted their respective “buy buttons” in 2015. Still, while some brands and users experimented with the option, there was not yet a groundswell of activity in social commerce. Like mobile payments, the buy button needs a little more time to heat up.
This holiday season showed us that consumers are developing a mobile shopping habit, one that may have a measurable impact on brick and mortar traffic and sales in 2016, but other trends will take a little more time to hit the mainstream. For social commerce, it remains to be seen how easily users in a social mindset can be converted to buyers, but brands (and the platforms that support them) are motivated to monetize the critical channel. Mobile payments have the opportunity to gain a lot of ground in 2016, as long as providers continue to educate shoppers and assuage obstacles like security concerns. While change won’t happen overnight, it’s very likely that by this time next year we’ll see a notable increase in items (perhaps wearables and safer hoverboards) purchased in non-traditional ways.

What changes if IoT makes your home the home shopping network?

One of the (many) promises of home automation solutions is automated grocery and staple replenishment. The core idea here is that anything which is regularly bought could simply be repurchased by pushing a button, or by a sensor realizing that you are, for example, out of milk. A recent VentureBeat piece predicted that 15% of all purchases could be passive buying experiences by 2020. Amazon’s Dash button is a great example how this is supposed to work, and we have been hearing about the smart fridge for some time.
15% seems like a very plausible number for the overall spend, and could be an under estimate in terms of number of transactions. Spending on food for the home, household supplies, personal care and healthcare was approximately 15% of spend in 2007, less than half the spend on housing itself (typically a single bill per month), and about the same as transport, which is perhaps 5 or 6 payments for most people (assuming a car or monthly commuting capability). It seems reasonable to think about this as being as much as a third of all specific purchases a consumer makes in a given month, which is obviously a huge change in the way products are purchased.
Part of the promise here is addressing the issue that customers don’t want to shop for single staples, today they manage this by buying in bulk, or periodic trips to the supermarket. To beat that experience the promise needs to be not far from “push a button and the laundry detergent is to be magically in the utility closet.”
How to deliver on that promise?
Perhaps the biggest challenge here is in managing delivery of single items to the home. This experience is already stretched, unless you are one of the lucky few in a doorman building the experience of using ecommerce solutions today is far too often an experience in getting used to where the Fedex office is in your city, and wondering why UPS isn’t open at the weekends.
Scott Rafer, organizer of Haulery, and investor/advisor to several companies in the home delivery and logistics space, commented “IoT driven shopping needs to focus on delivering end-to-end customer satisfaction, rather than optimizing a single piece of the puzzle… which is what I see too many of today’s ideas doing.”
There are various solutions here, but none have obviously achieved critical mass yet.

  • Scheduled deliveries can work well for some, but for many the scheduling doesn’t work with the rest of life, and again being home during a window is not the same as replenishment by button.
  • On-demand delivery services are emerging, and so far work best in crowded cities (hardly staple items, but interesting to see Postmates and Apple working together in New York).
  • Third party drop off/collection locations, like lockers in stores or car parks, work quite well, but are still not delivering the level of convenience that sensor based shopping promises, and typically need a certain level of density.
  • Smart locks/trusted home access have just started to become possible (August and the like might enable this, for example). Are we ready to have a delivery service in the house, even if well monitored? Drones of course can get round this by delivering to back gardens, or similar, assuming smart enough guidance systems.
  • The delivery challenge is an example of a topic I’ll be coming back to in future posts- innovation is rarely co-ordinated, yet at the same time assuming the rest of the world won’t change as you innovate in one area often leads to dead ends (fax machines anyone?).
    What are you going to buy?
    Sensor-based or automated buying also creates real challenges for the food retail and CPG players- an entire industry has been built around managing shelf space and working out how to best display products. What will happen to supermarkets? Do they become (even more) semi-public warehouses, with most of the interactions being at the drone dock or Postmates handoff point, with automated pickers dominating the aisles while a few hold-outs push trolleys around?
    For the CPG companies themselves “laundry detergent as a service” is going to change significantly how they have to market products. Instead of jockeying for shelf space, companies will be faced with consumers making longer term commitments to specific products, not because they necessarily want to, but simply because it’s taking away from the one touch convenience promise to have to think about which detergent or which ice cream you want today. Offering a coupon or 2 for 1 or the like won’t cut it any more. Consumer brands and products proliferated with the emergence of the self-service supermarket, will the current level of variety die with it too?
    Net- I don’t really want to have to buy laundry detergent at the store, but we face an awkward few interrelated innovation steps, not just the development of individual IoT sensors/switches in the home, and likely changes in how products are sold, before auto-replenishment beats what we have to do today.

    inMarket starts seeding grocery stores with presence-detecting iBeacons

    Mobile shopping app maker inMarket has rolled out Apple’s iBeacon technology in Safeway and Giant Eagle grocery stores, allowing customers with iPhones(s aapl) and other Bluetooth Low Energy smartphones to use their handsets as proximity-based shopping aides as they peruse the produce. The iBeacons detect where a customer is in a particular store, sending them coupons, alerts and other informational and promotional updates based on that location. inMarket is starting in San Francisco, Seattle and Cleveland, but will expand to grocery stores in other cities in the coming weeks. Shopkick announced a similar initiative with Macy’s last year.

    It’s going to be a very mobile Christmas for Braintree

    Payments processor Braintree is seeing a huge year-over-year jump in mobile payments this holiday season. According to CEO Bill Ready we’re witnessing the pent-up demand from consumers to use their phones as shopping tools.

    Shopular app pushes real-time deals while you’re at the mall

    Shopular, a location-aware mobile app, is officially launching Friday to serve up relevant in-store deals while consumers are shopping. To start, the app will only alert shoppers once it senses that they’re at a shopping mall, but the company plans to expand to more locations.

    Maluuba lets you shop by voice from your smartphone

    Maluuba, a Siri for Android app, is now offering users a way to shop by just asking Maluuba questions. The app has integrated with Walmart and Best Buy and pulls up data from Google as well.