December 29, 2014
Dining and lodging the big holiday gifts in 2014
While many traditional Christmas categories sold well this year, the biggest gains came from casual dining and lodging, according to Mastercard SpendingPulse’s initial report on holiday selling.
Casual dining and lodging saw double-digit and nearly double-digit year-on-year sales growth, respectively, from Black Friday through Dec. 24, according to the report, according to Reuters.
"This holiday season was a social one," said Sarah Quinlan, SVP at MasterCard Advisors, in a statement. "While certain retail categories saw steady performance from prior months, the focus on creating experiences stayed at the top of many lists."
Jewelry also saw solid gains, up mid-single digits. Ms. Quinlan also counted the gift of "memorable pieces of jewelry" as part of the experiential purchase. She added, "We saw increases in those categories that will drive future stories beyond just a package exchanged with a friend or family member."
In other categories, apparel overall saw single-digit growth and women’s apparel had mid single-digit growth. Furniture grew mid single digits. A surprising shortfall was the flat sales of electronics, although some analysts attributed that the decline in PC sales.
Overall, Mastercard estimated retail sales during the Black Friday to Christmas Eve period increased 5.5 percent in 2014, in line with the firm’s original forecasts. The gain reflected one additional shopping day this year over 2013 and was aided by an improving economy, although Ms. Quinlan said it wasn’t certain how much was driven by heavy discounts over the season.
Mastercard tracks spending by combining sales activity in MasterCard’s payments network with estimates of cash and other payment forms.
- Mastercard Spending pulse™ Today Reported Its Initial View On The 2014 U.S. Holiday Shopping Season – MasterCard Advisors
- Women’s apparel, dining drive U.S. holiday sales: MasterCard – Reuters
- Consumer Electronics Products Top Wish Lists For Americans This Holiday Season – Ebiquity
- Amazon Prime Experiences Another Record-Breaking Holiday Season – Amazon
Discussion Questions
Do you see traditional holiday gift categories increasingly competing against casual dining, trips and other “experiential purchases” in the years ahead? Can retailers do more to tap into the experiential trend?
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“Experiential” gift giving has been gaining traction for several years, so it’s not surprising to see strength in the 2014 numbers. It actually ties into some of the other reported gains in discretionary spending categories—especially jewelry and apparel—which have been stagnant for awhile. Consumers may finally have enough confidence in the economic rebound (and extra money in their pockets from falling gas prices) to do some self-indulgent shopping. A necklace or a mini-vacation is a better “feel-good” gift than a new coffee maker, after all.
These categories are perfect for retailer loyalty programs. Consumers like to have their shopping behavior work toward something—a trip, a restaurant meal, an amusement park visit, even movie tickets. Why not incorporate that into the incentives offered for top shoppers? Seems like an easy step from the turkeys retailers give away to shoppers who meet a purchasing threshold at Thanksgiving.
I do see these type of gifts increasing, particularly if the economy continues to expand. Retailers are already selling many dining cards as gifts but need to market the fact. Additionally there is a potential hotel night and/or resort market out there to be tapped. The chain dining establishments are already marketing gift cards with up to 20% in extra dollars as a bonus to incentivize purchases in the season. Typically these result in spending above the card value and are good for business. Other types of retailers and service establishments can learn from these offers.
Consumers seek experiences whether in a retail store, restaurant or vacation. This trend has been building for years. Retailers can tap into retail-tainment by making their stores fun places to shop, with engaging employees and unexpected finds of merchandise and deals. Too many stores have interchangeable layouts and merchandise with employees who are not engaged in enhancing the shopping experience.
Consumers spend according to the growth in their pocket books and their perception that they are gaining more consumer clout, and they want new experiences from their purchases. Generally consumers appear to enjoy “experiential purchases” and will likely continue that trend.
Retailers can not only do more to tap into the experiential trend, they must.
Tapping into the experiential trend is key to future retailing success. It challenges traditional retailing pillars of classic merchandising and buying. Creating the right set of experiences for consumers requires bundling of products and services by the retailer and partners to redefine shopping, irrespective of the category or path to purchase.
I think many of these purchases are just as much about being practical. Giving people dining gift cards instead of useless items that will end up in the bottom of the drawer.
I will also point out that most restaurants were also very aggressive gift card discounters this holiday. Smart business since a number of cards won’t be used, and the opportunity to sell the consumer more on their visit is always there.
This is a tough crossover for retailers. Our family has been trending to experiential gifts for several years now and I can’t see how any could have been acquired through traditional retailers.
We gave my six-year-old grandson song-writing lessons, and took our other 6-year-old grandson to the Avengers exhibition in Times Square. We took our nine- and 10-year-old granddaughter and grandson to see the Nets at Barclays Center. For several years we gave my son and wife a stay-cation (which included babysitting, of course).
And it’s not just the adults who give the experiences. My grandchildren gave me a Starbucks gift card—with the caveat that I have to take them.
We know that consumers are becoming increasingly jaded and that experiential rewards are a powerful motivation. Recent research FanXchange completed in conjunction with COLLOQUY shows that reward offerings play the primary role in gaining and keeping loyalty members and that experiential rewards—including live event tickets—are especially enticing.
Consumers only have one wallet, so anything that gets spent on is competition for every other category. As it gets harder and harder to shop for the more personal items, these alternative categories should continue to pick up.
Absolutely! Let me give an example. As a “woman of a certain age,” I have found that my skin tone and color have changed. In other words, my makeup doesn’t seem to cut it anymore. I mentioned to a friend that I just wasn’t aging very well. She said, “you should go have a complete makeover”!
Wow, I was ready to hang up the makeup brushes, but the thought of going in and being pampered with a complete makeover, that was money I was willing to spend.
Retailers need to be thinking “experience” a lot more these days!
And that’s my 2 cents….
Okay…confession time. I am not a shopper and certainly dislike having to do it. This year (again) I gave mostly gift cards to a casual dining place. It was certainly easier on me and (I think) the gift was appreciated.
No. This “trend” is perhaps a misnomer, given the size of the sample, and approach to the data. Holiday gifts are clearly shifting to technology, online sales, as the younger purchasing power develops into stronger spending consumers as they mature and their purchasing dollars develop.