For many shoppers Black Friday officially marks the beginning of the holiday shopping season. A few years ago this would have meant bundling into our cars and hitting the local mall or large department store, only to contend with large crowds and long lineups. But no longer.
The face of holiday shopping is changing, with a recent Reuters/Ipsos poll showing that 51% of American adults polled plan to do their online shopping on Amazon this holiday season, compared to 16% at Walmart, 3% at Target and 2% at Macy’s. Only about a quarter of respondents planned to shop at stores not listed in the poll. This poll underscores the hurdle faced by traditional retailers as they try to expand their online presence, with many large retailers finding their efforts falling short.
Target announced that it’s digital sales grew 20% in the last quarter, falling a full 10% short of its projected gain. Walmart also found itself falling short of its target, seeing only a 10% growth, much lower than its projected growth in the mid to high teens. Walmart attributes this to sluggish markets in China, Brazil and Britain, and states that it fared far better in the United States.
Amazon, in contrast, posted a 28 jump in North American sales in its last month Quarterly report, continuing to increase its share of the market considerably, drastically outshining both Walmart and Target.
The poll also found that 8% of adults polled plan to do all of their shopping online, compared to 6% last year. A further 17% of respondents plan to do most of their shopping online, making e-commerce more important to retailers than ever.
Amazon has become synonymous with online shopping for many shoppers, and has gained tens of millions of members to its Prime service by offering access to movies, music and other services in addition to free shipping. Amazon Prime is available for an annual fee, but for many individuals it is worth the price.
Here in Canada, online retail sales are also strong, with Canadians set to spend $33.8 billion per year by 2018, accounting for 8% of all retail sales. Overall Canadians tend to spend less money online than Americans, often deterred by high shipping costs and more limited choices. However, high profile American chains such as Macy’s, Bloomingdale’s and J.C.Penney have begun to ship to Canada, and are overcoming traditional hurdles by offering easy-to-understand shipping policies and posting prices in Canadian dollars.
However, Canadian’s still prefer to do their online shopping on Amazon, with 40% of people surveyed by Forrester Research having purchased a product or service from the company in the last 3 months.
Amazon is also able to focus all of its efforts on boosting online sales because it doesn’t need to worry about driving customers to physical stores, said Kerry Rice, an analyst at Needham & Co. “They drive you to that site in many, many ways. It’s not about driving foot traffic to retail stores.” Said Rice about Amazon.
In order to remain competitive traditional retailers will need to take a leaf from Amazon’s book and find out what online shoppers want. To do this, many will choose to turn to focus groups in order to better understand their customers and their wants and needs.
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