NRF Holiday Survival Kit ReportersFinal · The National Retail Federaton’s Holiday Survival Kit...

NRF’S 2011 HOLIDAY SURVIVAL KIT

www.nrf.com/holidays

NRF’s 2011 Holiday Survival Kit | www.nrf.com/holidays

The National Retail Federaton’s Holiday Survival Kit serves as a guide for reporters and retailers, offering historical information on holiday sales, employment data and consumer trends.

NRF experts will be available throughout the holiday season to discuss consumer trends, economic data and a variety of other retail topics. To interview a retail expert for print or broadcast, please email [email protected] or contact:

Kathy Grannis Jonathan Carden202-626-8189 202-661-3051

[email protected] [email protected]

Holiday trends and the latest survey data will be posted regularly on NRF’s Holiday Headquarters at www.nrf.com/holidays.

For other holiday news, follow NRF on Twitter (@NRFnews).

www.nrf.com/holidays | NRF’s 2011 Holiday Survival Kit 333333333333333333333333333

table of contents FAQs.............................................................................................................4–5

Historical Retail Sales ....................................................................................6–7

Retail Employment and Seasonal Hiring ........................................................8–9

Holiday Trends and Consumer Research ............................................... 10–11

Gift Cards ........................................................................................................12

Online and Mobile Shopping ............................................................................13

Black Friday Trends and Data ...........................................................................14

Cyber Monday Trends and Data .......................................................................15

Holiday Theft and Fraud ...................................................................................16

NRF’s 2011 Holiday Survival Kit | www.nrf.com/holidays4

FREQUENTLY ASKED QUESTIONS

What is NRF’s prediction for holiday growth this year?NRF is projecting 2011 holiday sales to rise 2.8% from 2010. If NRF’s 2.8% estimate is correct, holiday sales this year would be $465.6 billion.

How much did holiday sales change last year?In 2010, holiday sales increased 5.2% to $453 billion (pg. 7), which was a signifi cant improvement from the -0.4% decrease in 2009. On average, holiday sales have increased 2.6% per year for the last 10 years.

Why are these numbers different than what you have previously reported?Earlier this year, the Commerce Department revised the last eight years of retail sales data. NRF has revised holiday sales and growth based on those numbers.

What percentage of annual sales do the holidays represent?For some retailers, the holiday season can represent anywhere between 25–40% of annual sales. In 2010, holiday sales represented 19% of total retail industry sales (pg. 7).

Will NRF change its holiday forecast throughout the course of the holiday season?While NRF reserves the right to change its forecast at any time, NRF rarely revises its forecast. In 2010, NRF raised its forecast mid-season when sales were better than expected. In 2001, NRF lowered its forecast. NRF has no plans to change its forecast for 2011.

How do NRF’s surveys differ from its forecast?NRF’s holiday forecast is based on an economic model using indicators like housing data, unemployment and previous monthly retail sales reports from the U.S. Department of Commerce. NRF’s holiday surveys, conducted by BIGresearch®, are completed by thousands of Americans with a very low margin of error. These surveys provide a snapshot of what consumers say they plan to do for the holiday season. This is the tenth holiday season that NRF has partnered with BIGresearch to provide holiday data, making it possible to identify year-over-year trends.

How many extra jobs does the retail industry create during the holiday season?This year, NRF estimates that retailers will hire between 480,000 and 500,000 seasonal employees, comparable to the 496,000 they hired last holiday season and substantially more than the 333,000 hired in 2009. For more information, see page 8.


What does NRF classify as the “winter holidays”?NRF tallies total retail industry sales from November and December—61 days total—to determine holiday sales. Holidays during this period include Thanksgiving, Christmas, Hanukkah and Kwanzaa. This year there are 30 days in between Thanksgiving and Christmas.

How does NRF defi ne “retail industry sales”? Retail industry sales include most traditional retail sales categories such as discount stores, department stores, grocers and specialty stores and exclude sales at automotive dealers, gas stations and restaurants. Online sales are tallied separately due to a lag in reporting by the Commerce Department.

What is Cyber Monday?Cyber Monday, the Monday after Thanksgiving, is the online retail equivalent to Black Friday. The term was coined in 2005 by NRF division Shop.org based on a clear consumer trend that retailers began to recognize in 2003 and 2004. At the time, retailers noticed that many consumers, who were too busy to shop over the Thanksgiving weekend or did not fi nd what they were looking for, shopped online that Monday from home or work to fi nd bargains.

Why are many retailers putting holiday merchandise on the shelves so early?Each year, about 40% of consumers begin their holiday shopping before Halloween. While most retailers do not begin holiday advertising until at least October or November, they recognize that many people like the idea of shopping early to spread out spending over a longer period of time. As a result, many retailers put holiday merchandise on the shelves in September—specifi cally decorations and greeting cards, which many people buy months in advance.

Is Black Friday the busiest shopping day of the year?NRF does not monitor or track sales by day. However, ShopperTrak, which counts foot traffi c at malls, reports Black Friday remained the number one performing day in 2010 for the seventh year in a row, followed by Dec. 23 and the Saturday before Christmas.

Why have retailers changed their return policies?Some retailers make return policies more lenient during the holiday season, understanding that there may be a lag time between when a gift is purchased and received. However, many retailers have also begun to change their return policies to account for an increase in return fraud. Last year, retailers said they lost $3.7 billion due to return fraud during the holiday season, according to NRF’s annual Return Fraud survey (pg. 16).

What is the best way to monitor online holiday sales?Commerce Department data on online shopping typically lags behind reporting of traditional retail sales by a month or more, so the best way to monitor online holiday trends is through Shop.org’s eHoliday survey. For information on online sales in different product categories, Nielsen//NetRatings and comScore release regular sales updates.

Are traditional retailers hurt when people shop online?Most retailers have no preference when it comes to whether customers shop in stores or online or even through their smartphone—as long as they shop with them. Retailers know their customers like to shop in a variety of ways and they have adapted to ensure customers can do their shopping in ways that are most convenient.


It’s no understatement that holiday sales for retailers are crucial: for some companies, the holiday season can account for anywhere between 25 and 40% of annual sales. This year, NRF estimates that holiday sales—defi ned as retail industry sales in the months of November and December—will increase 2.8% to $465.6 billion.

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2.3%

3.4%

1.3%

4.7%

5.9%5.4%

3.1%

1.8%

-4.4%

-0.4%

5.2%

2.8%

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2011

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Over the past 15 years, the share of annual sales during the holiday season has continued to decline. Some of that shift could be due to the fact that many Americans begin their holiday shopping in October or redeem gift cards in January or later. Regardless, holiday sales consistently represent nearly one-fi fth of annual retail sales.

HISTORICAL RETAIL SALES

With the exception of 2008

and 2009, holiday sales

have continued to experience

year-over-year gains.

The average increase in

holiday sales for the past

10 years is 2.6%

Holiday Retail Sales Growth by Year


Retail categories are affected by the holiday season—and the economy—in very different ways. Jewelry stores and department stores, which emphasize discretionary gifts and desired holiday items, see a higher-than-average percentage of sales occurring during the holidays. Alternatively, home improvement and furniture retailers—which do not feature as many sought-after gifts—see some of the lowest percentage of sales during the holidays.

RETAIL SALES BY SECTOR, 2010 (IN MILLIONS)

Holiday Sales Annual Sales% of Annual Sales During Holidays

Discount Stores $28,776 $123,538 23.29%

Department Stores $45,983 $188,894 24.34%

Clothing & Accessories Stores $48,610 $213,872 22.73%

Jewelry Stores $7,719 $26,701 28.91%

Sporting Goods, Book, Hobby & Music Stores $19,424 $84,474 22.99%

Electronics & Appliances Stores $22,735 $100,471 22.63%

Furniture & Home Furnishings Stores $16,634 $88,229 18.85%

Warehouse Clubs & Superstores $72,235 $370,750 19.48%

Building Equipment & Supplies Stores $45,942 $283,970 16.18%

Food & Beverage Stores $103,185 $583,306 17.69%

Electronic Shopping & Mail Order Houses $60,216 $270,668 22.25%

Health & Personal Care Stores $47,204 $262,978 17.95%Source: NRF, derived from U.S. Department of Commerce data

RETAIL INDUSTRY SALES BY YEAR

YearHoliday Retail Sales

(in millions)Holiday Sales

ChangeAnnual Retail Industry

Sales (in millions)Holiday Sales as a % of Industry Sales

2010 $452,951 5.2% $2,339,178 19.36%

2009 $430,673 -0.4% $2,260,685 19.05%

2008 $432,561 -4.4% $2,342,209 18.47%

2007 $452,453 1.8% $2,332,907 19.39%

2006 $444,575 3.1% $2,271,453 19.57%

2005 $431,302 5.4% $2,171,323 19.86%

2004 $409,095 5.9% $2,058,375 19.87%

2003 $386,280 4.7% $1,943,339 19.88%

2002 $368,769 1.3% $1,873,748 19.68%

2001 $364,115 3.4% $1,818,442 20.02%

2000 $352,163 2.3% $1,760,525 20.00%

1999 $344,200 8.1% $1,678,303 20.51%

1998 $318,418 5.8% $1,571,426 20.26%

1997 $300,873 4.2% $1,492,737 20.16%

1996 $288,650 3.5% $1,425,414 20.25%

1995 $278,825 3.1% $1,356,663 20.55%

1994 $270,415 N/A $1,299,910 20.80%


RETAIL EMPLOYMENT AND SEASONAL HIRING

The retail industry supports one out of every four American jobs—that’s nearly 42 million full-time and part-time workers. This holiday season that number will rise even higher, as NRF predicts retailers will hire between 480,000 and 500,000 people to staff stores. In addition to retailers’ seasonal positions, retail indirectly creates many jobs throughout the holiday season for workers in transportation, manufacturing and fulfi llment.

200 2000 2002 2004 2006 2008 2010

400

600

800

In T

hous

ands

NRF expects the retail

industry to hire between

480,000 and 500,000

seasonal workers this

holiday season

Source: National Retail Federation, derived from Bureau of Labor Statistics data

Historical Holiday Hiring

HOLIDAY EMPLOYMENT IN THE RETAIL INDUSTRY

YearNumber of Holiday

Hires% Increase in Holiday

Employees vs. Jan-OctYear-Over-Year Holiday Employment Change

2010 496,000 4.32% 50.42%

2009 333,000 2.87% 45.55%

2008 239,000 1.97% -62.18%

2007 637,000 5.22% 4.13%

2006 604,000 5.01% -6.81%

2005 642,000 5.38% -0.88%

2004 637,000 5.42% 13.03%

2003 558,000 4.80% 7.20%

2002 525,000 4.48% 12.16%

2001 475,000 3.99% -31.79%

2000 696,000 5.85% -8.52%

1999 744,000 6.40%


In September 2011, the National Retail Federation launched a 12-month campaign to advance a Jobs, Innovation, and Consumer Value Agenda on behalf of America’s retail industry. The campaign encourages retailers of all sizes to make their voices heard.

At the center of the campaign is NRF’s website, RetailMeansJobs.com, which features new data from PricewaterhouseCoopers. The study, conducted by PwC for NRF, found that retailers and restaurants support 41.6 million full-time and part-time jobs, or 24 percent of U.S. jobs, making retail one of the largest private sector employers.

The campaign was launched to advance a comprehensive policy agenda with specifi c priorities to support the creation of new jobs, encourage continued innovations that will drive the growth of commerce, and fi ght against higher costs for consumers.

Visit RetailMeansJobs.com to learn more.

Retailers and restaurants

support 41.6 million

jobs in America


HOLIDAY TRENDS AND CONSUMER RESEARCH

Retail companies and analysts commonly seek out consumer trend data from the National Retail Federation for insight on what to expect from shoppers during the crucial months of November and December. This is the 10th holiday season NRF has partnered with BIGresearch to provide information on shopping patterns and trends.

The economic recession in 2008 was a considerable setback to average consumer holiday spending, dropping from $755.13 in 2007 to $694.19 in 2008. In 2010, average spending crept higher.

Source: BIGresearch for NRF, 2010

First 2 weeks of December 18%

Last 2 weeks of December 4%

Before September 13%

September 6%

October 19%

November 40%

$410.75 Gifts for family

$74.57 Gifts for friends

$19.06 Co-workers’ gifts

$36.34 Other gifts

$43.32 Decorations

$90.09 Candy and food

$27.24 Cards and postage

$17.60 Flowers

$718.98 Total

Average Consumer Spending for the Holiday Season, 2010

When Consumers Begin Holiday Shopping

Historical Holiday Spending Per Person

$660.00

$700.00

$740.00

$780.00

2005 2007 2009

About 40% of consumers

begin holiday shopping

before Halloween


Holiday Shoppers’ Preferred Payment Method


1. Target

2. Walmart

3. Macy’s

4. Best Buy

5. Kmart

6. Sears

7. Old Navy

8. Kohl’s

9. JCPenney

10. Toys “R” Us

Shoppers’ Favorite Holiday TV Ads, 2010

In the past decade, consumers’ preferred payment methods have shifted substantially. During and after the economic recession in 2008, many shoppers began to shy away from credit cards and instead transitioned to debit cards and cash – opting to purchase gifts with money they already had in their bank accounts to help them budget instead of relying on credit to fund holiday purchases. In 2010, the number of consumers who primarily used credit cards to purchase holiday gifts was at the lowest level since 2002.

Holiday Shoppers’ Preferred Payment Method

0%

10%

20%

30%

40%

50%

2002 2004 2006 2008 2010

Debit card/Check card Credit Card

Cash Check

Per

cent

Usi

ng

Many shoppers are

moving away from

credit card spending,

preferring debit cards or

cash for holiday purchases

A large part of a retailer’s holiday plan involves marketing and advertising. In recent years, retailers’ holiday commercials have featured creative, comical and emotional themes – aiming to reach the millions of Americans who tune in to their television every day.


The popularity of gift cards has grown tremendously in recent years, especially during the holiday season, as gift cards remain a favorite choice for both gift givers and receivers. More than half of holiday shoppers in 2010 said they’d like to receive gift cards – marking four years in a row that gift cards have topped consumers’ holiday wish lists.

Gift givers planned to

spend an average of $40

on each gift card they

bought during the 2010

holiday season

GIFT CARDS

Average Consumer Spending on Gift Cards during the Holidays

$130.00

$140.00

$150.00

$160.00

$146.20

$156.24

$147.33

$139.91

$145.61

20072006 20092008 2010



ONLINE AND MOBILE SHOPPING

Retailers are reaping the benefi ts of consumers’ love of online shopping, especially during the holidays. Last year, 44% of holiday shoppers made a purchase on the web – and these shoppers are particularly lucrative for retailers. According to an NRF survey conducted by BIGresearch, Americans who shopped online and in stores last holiday season spent 25% more than those who shopped in stores only.

While Americans shop online for a variety of reasons, the convenience factor is paramount. The ability to shop at any time of day without circling a parking lot or standing in a long line sends millions of holiday shoppers online. Others use the web to compare prices or research products before deciding which local store to visit. Free shipping offers are also a big draw among shoppers, and that incentive has become a rule not an exception: last year, 85% of online retailers offered free shipping with conditions at some point during the holiday season.

Source: Shop.org 2010 eHoliday Survey, conducted by BIGresearch

As Internet shopping becomes mainstream, an emerging channel allows consumers to research products, look up store hours and locations, read customer reviews and make purchases: mobile retail. Last year, more than one-quarter of smartphone owners planned to make a holiday purchase via their phone, and that number soared to nearly 50% among 18-24 year-olds. This year, NRF will break out purchase intentions by smartphones and tablets to get a sense of how trends will vary based on device.

Smartphone Users Who Made Holiday Purchases with their Mobile Devices


24-hour shopping convenience 35.1%

I don’t want to fi ght the crowds in the 30.8%mall/traditional stores

Easier to compare prices 33.1%

Free shipping offers 31.5%

More convenient to shop online 29.2%

Easier to fi nd items online than in stores 17.5%

Better variety online 17.4%

0% 10% 20% 30% 40% 50%

45.0%18-24

43.5%25-34

26.4%35-44

15.3%45-54

10.4%55-64

6.9%65+

Smartphone Users Who Made Holiday Purchases with their Mobile Devices

Why Consumers Choose to Holiday Shop Online Rather Than In Stores

Age


While historically Black Friday – the day after Thanksgiving – has not been the busiest shopping day of the year, it has taken back the title in recent years thanks to the economic downturn and desire of consumers to fi nd great deals. Over the past few years, some retailers have tried to get a jump start on their competition by opening their doors on Thanksgiving, and that approach seems to be working: approximately 22 million people said they put down the pumpkin pie and hit the stores on Thanksgiving in 2010, up from 10.3 million in 2005.

BLACK FRIDAY

Approximately

22 million people said they

put down the pumpkin pie and

hit the stores on Thanksgiving

in 2010, up from 10.3

million in 2005

What Holiday Shoppers Bought Black Friday Weekend

Clothing or Clothing Accessories 52.7%

Jewelry 14.3%

Home decorated-relatedfurnishing 20.2%

Books, CDs, DVDs, videos or video games 42.1%

Toys 33.6%

Source: BIGresearch for NRF

Thursday(Thanksgiving)

Friday Saturday Sunday 10% 20% 30% 40%50%

20

0

40

60

80

100

2008 2009 2010

Millions Who Shopped Black Friday Weekend


CYBER MONDAY

Cyber Monday brings

millions of people to

retailers’ websites every

holiday season with shoppers

logging on early in the

morning, throughout their

lunch hour and late

in the evening

Cyber Monday, a term coined by Shop.org in 2005, began after retailers noticed a trend of people shopping online on the Monday after Thanksgiving. Today, Cyber Monday is viewed as the ceremonial kick off to the online holiday shopping season, when shoppers fl ood websites expecting robust promotions and many retailers highlight some of their most compelling holiday offers.

40

60

80

100

120

2006 2008 2010

59.0 60.7

72.0

84.7

96.5

106.9

In 2006, Shop.org launched CyberMonday.com, which helps shoppers fi nd the best online holiday deals. When shoppers make a purchase through the site, retailers provide a percentage of the sales to a scholarship fund, which helps students pursuing careers in ecommerce. More than $1.5 million has been added to the scholarship fund through CyberMonday.com.

Cyber Monday Shoppers by Year


HOLIDAY THEFT AND FRAUD

Return fraud is big business during the holiday season. Criminals commonly take advantage of companies’ holiday return policies to receive cash for stolen merchandise, launder money or return items after they have been used. Last year return fraud cost retailers an estimated $3.7 billion during the holiday season and $14 billion throughout the year. Many companies have begun asking their customers to provide identifi cation when returning an item, most often when a return is not accompanied by a receipt. A 2010 NRF survey found more than two-thirds of retailers said they ask for ID when there is no receipt present with the returned merchandise.

NRF 2010 Effective Crowd Management GuidelinesPlanning for large crowds on days like Black Friday is a top priority and something retailers spend a signifi cant amount of time perfecting. Many considerations go into this type of crowd management including event type, staffi ng and training, communication, physical and environmental considerations, and line formations. Each holiday season, NRF produces crowd management guidelines, which offer best practices for retailers in anticipating large crowds. Learn more at www.nrf.com/crowdmanagement.

100%

80%

60%

40%

20%

0%

Returns usingcounterfeit receipts

Wardrobing (returns of used, non-defectivemerchandise)

Return of stolenmerchandise

Return of merchandisepurchased on fraudulentor stolen tender

Employee return fraud or collusion with external sources

2010

Percent of Retailers That Have Experienced Return Fraud

Source: NRF 2010 Return Fraud Survey

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NRF Holiday Survival Kit ReportersFinal · The National Retail Federaton’s Holiday Survival Kit...

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