he holiday shopping season is gaining momentum. Signs still point to healthy spending, and Amazon once again has positioned itself to gain share. With an estimated market share of 7%–8% of Bain-defined holiday retail sales, Amazon is expected to capture about 50% of total holiday growth this season. In this issue, we look at Amazon’s strategy and examine how retailers can capture more than their fair share of the other half.
Holiday shopping update
The holiday rush is on, and the shopping environment remains strong:
- Macroeconomic indicators are favorable. The U-6 unemployment rate, which includes unemployed, underemployed and discouraged workers, dropped to 7.9% in October, reaching its lowest level since 2006. Disposable income was up (1.2% year over year growth this September versus 1.1% last September), as was the Consumer Confidence Index (125.9 in October, a 25% increase over October 2016’s 100.8). Consumers continue to be optimistic and have more money in their pockets as the holiday shopping season begins.
- Stock market momentum continues. The Dow Jones Industrial Average and the S&P 500 Index continue their climb to all-time highs, increasing 6% and 4%, respectively, between September 1 and October 31. During the same period last year, both indexes fell by more than 1%.
- Consumers still have a lot of shopping to do. Bain’s 2017 Holiday Shopper Pulse, a survey conducted in collaboration with Research Now, suggests that as of November 1 the majority of consumers were still gearing up to shop. Fewer than 22% of shoppers claimed to have most of their holiday shopping done.
- Leaders are gaining share of web traffic. This year Bain partnered with SimilarWeb to track web traffic at 250 top retailers during September and October. The data suggests a consolidation of web traffic toward online leaders, a continuation of the winners-take-most trend in e-commerce. The top 10 retailers gained 2.7 percentage points of share, claiming 63.9% of the total web traffic over the period. Amazon had the largest share of that traffic (31.4%), up 2.2 percentage points from the same period last year.
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