How Will You Be Shopping This Holiday Season?

Black Friday, the day after Thanksgiving that traditionally marks the beginning of the holiday shopping season in the U.S., has long been synonymous with big deals and even bigger crowds.

A strong Black Friday is often seen as an indication that sales will be good for the remainder of the year. Depending on your source, however, this year’s in-store shopping on Thanksgiving and Black Friday dropped between 1.6% and 4% from sales a year ago.

This doesn’t mean that shopping will be sluggish this holiday season, however; over those same two days, online sales grew an impressive 18% to a record $7.9 billion. If you look at 5-day sales trends from Thanksgiving to Cyber Monday (the Black Friday equivalent for online shopping that falls on the following Monday) then Americans spent a whopping $19.62 billion online and helped to drive an increase in overall sales despite the Black Friday slump on in-store sales.

So what does this say about the rest of the holiday season?

Spending Is Up

Holiday shopping is affected by a number of factors, including the strength of the economy and employment rates.

At the moment, the economy is strong, unemployment is low and the weather has been good enough to encourage potential shoppers to get out of the house. The National Retail Foundation predicts that overall sales this holiday season may top last year by as much as 4% (an increase of around $27 billion), and sales so far suggest that spending may go even higher than that. In the 5-day span between Thanksgiving and Cyber Monday, as many as 10 million more shoppers hit the stores than the NRF was expecting.

Provided that sales continue as predicted, we’ll likely see grown in both retail and online sales to help provide that 4% spending bump. While this would result in only a 1.8% increase in retail sales over last year, the increase in mobile and online spending will be much more significant.

Online Shopping Is Way Up

If trends continue, holiday shopping online sales may jump by as much as 17% over last year’s holiday season.

Current estimates suggest that online and mobile holiday sales could reach around $108 billion this year, out of an estimated $682 billion overall. This means that approximately one out of every six holiday purchases this year will be made online or from a mobile device, which is significant given that only five years ago this number was closer to one in 14.

Retail shopping at brick-and-mortar stores obviously remains dominant when it comes to holiday season shopping, but that dominance isn’t as strong as it once was. Younger people, especially those in their late 20s and early 30s, are most likely to shop online this year. This is significant, since these are also the individuals who will come to play one of the largest parts in holiday shopping in the years to come. This suggests that online shopping will become an even stronger force during the holiday season in the future.

Mix and Match

It’s important to remember that sales increases and holiday market share aren’t quite as clear-cut as they might appear at first. Online sales are growing at a much higher rate than retail sales, yes, but retail sales have a much higher base to work from so equivalent increases would look more impressive as a percentage of online sales than retail.

Only looking at the numbers also ignores the fact that many people shop both online and in retail stores; 58 million people shopped only online between Thanksgiving and Cyber Monday versus 51 million who only shopped in stores, but both of these numbers are dwarfed by the 64 million who shopped in stores and also shopped online.

It’s this last group that will shape the future of retail. While the holiday shopping statistics suggest that any given purchase is more likely to be made in a retail store than online, there’s a good chance that you’re going to shop in both locations this holiday season.

If online growth trends continue into the future then we may reach a point where purchases are equally likely to be made at retail stores or online, but the overall reality will be that many consumers will make use of both throughout holidays to come.