Online Could Steal In-Store's Holiday Pie Faster than Expected

Survey shows nearly two-fifths of holiday shopping could take place online

Author: Andria Cheng

October 18, 2017

As consumers increasingly shop online, the storyline of ecommerce sales outpacing brick-and-mortar demand this holiday season is not a surprise theme. But a recent survey suggests the online shift may be happening much faster than expected. 

US consumers expect to do nearly 40% of their 2017 holiday shopping online, up from one-third just two years ago, according to market research firm The NPD Group’s “Holiday Purchase Intentions Survey." Online shoppers said they plan to spend an average of $793 this holiday season, 70% more than the $467 brick-and-mortar-only shoppers expect to spend, according to the September survey of nearly 3,800 US adult consumers released this week.

While shoppers’ intention doesn’t always necessarily line up with what they end up doing—and many studies have showed consumers still prefer to shop in stores—the NPD survey does signal that the tidal shift turning in online’s favor may continue to top industry expectations.

Trade group National Retail Federation (NRF), for instance, projected digital and other nonstore holiday sales, though growing at more than twice the pace of overall sales, will only make up 11% to 15% of total holiday sales this year. eMarketer, meanwhile, previously forecast that holiday ecommerce sales will represent 11.5% of the season’s total retail sales in 2017. (Note, eMarketer's forecast includes broader retail industry sales, and is not just limited to holiday gift buying.)

“Online is going to play an increasingly critical role in the 2017 holiday shopping season,” said NPD chief industry analyst Marshal Cohen in a statement. “Retailers, big and small, recognize online retail’s importance and have been turning up the volume on their online strategy this year, which will only intensify during the holidays.”

Indeed, while Amazon will likely turn out to be the top online share winner this holiday season, Walmart and many other brick-and-mortar retailers are also pushing online sales—and using their physical stores as either fulfillment or pickup and return centers, or both. These efforts, broadly described as omnichannel initiatives, have helped to further blur the line of what constitutes online vs. physical-store sales.

As an example, a Walmart Halloween TV commercial currently running is inviting shoppers to order online for same-day in-store pickup. The retail giant said recently that ecommerce-related initiatives, including adding about 1,000 stores that can fulfill online grocery orders for pickup, will be a key part of its capital investment. Walmart and other retailers have also teamed up with Google to use its digital assistant to take on Amazon and capitalize on growing voice-commerce demand this holiday season. 

Those moves by retailers like Walmart have paid off and increased consumers’ online adoption. While the likes of digital retailers such as Amazon and eBay topped the list of NPD’s survey for “anticipated holiday shopping destinations,” mass merchants and discounters like Walmart—and their websites—were the second most popular planned destination, followed by other national chains and department stores, according to the poll.

In another sign of consumers’ fast behavioral shift, NPD’s tracking of actual purchase receipts also showed that people have bought general merchandise online during the holiday season more often, while decreasing their in-store purchases. For instance, during Q4 2016, the frequency of consumers’ online shopping rose 12% year over year to more than six orders, while buying at brick-and-mortar locations dropped 4% to an average of 18 purchases, according to NPD.

That trend will likely continue this year. In a separate Accenture study released this week, half of consumers surveyed said that a “convenient shopping experience online,” including smooth checkout and using mobile apps, is the main factor that “will positively affect” their spending this holiday season, far above other reasons including having a good job or convenient in-store shopping experiences.