U.S. consumers might do more of their spending online than ever before this holiday season, adding pressure on shopping malls already struggling to lure traffic.
Forty-four percent of the average consumer’s shopping will be on the Web, compared with about 40 percent last year, according to a survey released Thursday by the National Retail Federation. That proportion, which includes browsing sessions where shoppers don’t make a purchase, is the highest since at least 2006, when the NRF first asked the question.
“Online has done a much better job of captivating the consumer with prices and early promotions,” Marshal Cohen, chief industry analyst at consulting firm NPD Group Inc., said in an interview. “The more people spend online, the less people are in the stores, and the less the impulse purchasing.”
U.S. retail sales are expected to rise 4.1 percent to $617 billion in November and December, the most in three years, according to an earlier report by the NRF. Employment gains are lifting consumer confidence and giving more shoppers the money to buy gifts this year. Given the online shift, brick-and-mortar stores may miss out on a chunk of this resurgence in spending.
According to the NRF, consumers will also spend less on themselves this holiday season, with 57 percent planning to spend $126.68 on non-gifts, down from $134.77 last year. On top of that, the survey also found that shoppers will be more discerning, with 36 percent planning to check products and prices before they buy, the highest proportion in at least four years.
Fifty-six percent of smartphone owners plan to use their device while shopping, for example, to check prices online while they are visiting stores, up from 54 percent last year.
The trend toward online spending highlights the challenge facing retailers with stores in malls, where foot traffic declined 3.1 percent in September and 2 percent in the week ended Oct. 11, compared with the same periods a year earlier, according to researcher Shoppertrak.
“We have to realize that consumers are not the same as they were 20 years ago,” said Paula Rosenblum, a Miami-based managing partner at RetailSystems Research, in a phone interview.
And while surveys forecast an increase in spending this holiday, it’s not a given in light of choppy spending so far this year. Retail sales in the U.S. dropped 0.3 percent in September, Commerce Department data showed Wednesday, a decline that was steeper than economists forecast. The drop followed a 0.6 percent gain in August that was the biggest in four months.
Wal-Mart Stores Inc., facing a decline in traffic to big-box chains, cut its annual sales forecast Wednesday and predicted slower profit growth over the next three years.
This year’s back-to-school season, often seen as a harbinger for the holidays, was the slowest since the recession ended in 2009. Spending in the period rose 3.1 percent, missing a forecast for a 3.2 percent gain, according to research firm Customer Growth Partners LLC.
Given the uncertain mood of consumers, many chains will likely resort to cutting prices to win shoppers from competitors.
One thing favoring retailers this year is the falling price of gasoline. Cheaper fuel has put an additional $50 billion in personal disposable income for U.S. households, Joseph Brusuelas, chief economist at McGladrey in Phoenix, wrote in an e-mail to clients Wednesday.
While shoppers still flock to stores for Black Friday deals, companies and shopping centers need to add more excitement to entice customers to visit throughout the season with the potential for making impulse purchases, NPD’s Cohen said.
“The mall has to do more to help retailers get consumers in the stores,” he said. “That’s where the business is going to grow.”