Six key trends to watch in consumer spending.
Combine the lasting effects of the Great Recession with new technologies and you get new trends in U.S. consumer spending habits. Here are some of the notable aspects about the ways today's consumers shop:
More than 50 percent of online shopping traffic came from mobile during the five days from Thanksgiving to Cyber Monday this past holiday season.
1. Wallets are opening. A Consumer Reports study shows that Americans are ready to make purchases. Seven out of 10 consumers said they were ready to buy things that they had put on hold, and 60 percent said they had already begun. Americans ages 18 to 24 are especially ready to spend on large purchases this year. A quarter of them said they were prepared to buy a home, and a third said they planned to shop for a car.
2. People are thriftier despite the recovery. The Great Recession made consumers more cautious. In the Consumer Reports study, eight out of 10 shoppers said they were unable to afford certain big purchases. "For more than a third of people, the out-of reach dream was a new home; for others it was a pricey vacation or a flat-screen TV," reports the study. Thirty-seven percent said they put tax refunds toward mortgages, groceries or living expenses.
3. Consumers are buying online. In 2014, online holiday season sales jumped 13.9 percent compared with 2013, according to the IBM Digital Analytics Benchmark report. The 2014 UPS Pulse of the Online Shopper™ study dug deeper and found that 43 percent of online buyers begin prepurchase research at a retailer's store, website or printed catalog – supporting the shift toward an omnichannel buying experience.
4. A mobile mindset. According to the IBM data, mobile accounted for 45 percent of all 2014 online holiday traffic and for 22.6 percent of online sales, a 27.2 percent gain over the 2013 total. And more than 50 percent of online shopping traffic came from mobile during the five days from Thanksgiving to Cyber Monday.
5. Gift cards are the new gift-giving flavor. Sales of prepaid gift cards were expected to top out at around $124 billion in 2014, up from $118 billion in 2013, according to CEB Tower Group, a research firm. CEB notes that many consumers spend more than the value of the gift card, resulting in more sales for retailers. And for eight straight years, gift cards have been the most-asked-for gift item, the National Retail Federation found. Among the benefits: They're easy to get, recipients choose what they want, and return hassles are eliminated.
6. Stores are not going away. "The store still plays a big role that can be leveraged," says Bala Ganesh, UPS retail segment marketing director. In a UPS/comScore study, 54 percent of consumers who purchased online opted to ship to a nearby store for pickup, and of those, 40 percent purchased additional merchandise while in the store. "People do like the personal touch in-store, as well as the ability to ask questions and actually see the merchandise – that's why stores are still viable," Ganesh says.