We review the categories, products and brands that are likely to be in demand this holiday season.
- Consumer research shows that gift cards will be the most desired gift this season: Gift givers can offer recipients a variety of experiences and services as well as product purchases.
- Gift cards for experiences will be particularly popular this season.
- Among the most popular gifts adults would like to receive are comfortable clothing, accessories and tech gadgets.
- Popular gifts for children include dolls, plush toys and figurines.
We continue our US Holiday 2018 series with a review of the categories, products and brands that are likely to be in demand this holiday season. We expect US retail sales to increase by a solid 4% year over year with e-commerce enjoying growth of 16% year over year. At the end of the Thanksgiving weekend, almost half of US shoppers had done only 25% of their shopping, and 23% had not even started, according to a survey by the National Retail Federation (NRF) and Prosper Insights & Analytics. With almost three more weeks of shopping time and so much shopping not yet done, we see steady retail traffic and sales in the coming weeks.
According to the NRF survey and data from Prosper, the gift most people want to receive is a gift card, followed closely by clothing and clothing accessories.
Gift Cards Most Popular
Gift cards will be the most popular gift this season, according to Prosper. Among all adults surveyed, 59.5% of survey respondents choosing them, down from 61.0% in both 2016 and 2017.
- Not all gift cards are for retailers: Many are for hotel stays, a day at a spa, a massage or personal training at a gym. Restaurants ranging from five-star luxury establishments to Starbucks also offer gift cards. Media and entertainment can be gifted through cards as well, including iTunes and Spotify gift cards, and movie passes.
- Retailers can optimize their gift card profitability by refreshing stores immediately after Christmas, when shoppers armed with gift cards are more likely to be willing to pay full price for new items – but not for the same things they’ve seen in stores since late November.
- The only caveat is that while recipients prefers a gift card, individuals often prefer giving more tangible gifts.
Many people are also asking for clothing and clothing accessories, so we expect apparel sales to do well. Upwards of 53% of adults reported they would like to receive clothing this holiday season, according to Prosper. Not surprisingly, the newest trends and styles are more important to millennials than they are to older shoppers, with 31.1% of millennials claiming newness and style matter versus 19.5% of Gen Xers and 18.7% of adults in total.
Apparel and Footwear Gifts
Traditional clothing alternatives will be successful. Brands such as Brooks Brothers feature classic takes on staple outfit pieces in their holiday collections. Seasonally appropriate sweaters will also be popular apparel gifts. From luxury designers such as Peter Millar and Barbour to essential brands such as Uniqlo, sweaters are likely to be a common holiday gift.
With younger adults opting for more laid-back style, we expect millennial-focused brands such as UNTUCKit to see success in a season in which 72% of consumers ages 18–24 are asking for apparel—along with sports apparel brands such as Adidas, Champion, Nike and Under Armour. UNTUCKit offers men’s shirts designed to be worn untucked.
Casual shoes are becoming more prevalent in workspaces, and holiday gift sales are likely to reflect this trend. Branding itself as “the world’s most comfortable shoe,” Allbirds’ wool sneakers will appeal to those seeking a casual look. The most popular model is the Wool Runners, available in 14 colors and made for men, women and children.
Technology gadgets will also be popular, with 29.3% of survey respondents saying they would like to receive a consumer electronics product or accessory this year. Google and Amazon both are poised to benefit, with their multiple levels of voice assistant devices. The Google Home Mini and Amazon Echo Dot are available for less than $50, and upgraded versions come with more powerful speakers.
New iterations of mobile technology will also be popular, such as the new iPhone XS with super retina display, which is also available in Max size, the largest iPhone screen yet. Fitness watches remain popular. Traditional watch brands such as Fossil, Diesel and Michael Kors now offer smart watches. Smart watch incumbents such as Fitbit and Apple have updated their models as competition has grown, so while the competition has stiffened we expect these brands to retain their appeal.
Developments in fashion tech are also certain to top wish lists. Marc Jacobs designed two app-controlled smart watches. The touchscreen version features a built-in voice-activated Google Assistant; the watch can track activity and deliver smartphone notifications. The hybrid has a traditional watch face that makes it look like an ordinary watch. Michael Kors and Kate Spade have also designed smartwatches with technological capabilities almost identical to Marc Jacobs’ touchscreen watch.
Personal care and beauty items
The popularity of wellbeing in beauty continues to grow. Some 19.3% of respondents said they would like to receive beauty products this year, and we expect products that feature longer-lasting benefits, such as cleansers and serums, to be more popular this year than temporary fixes such as makeup. The relatively new brand Starskin, now carried at many major retailers, sold out its Orglamic serum mist and glass face mask in its presale earlier this season.
Gifts for Kids
With Toys “R” Us gone, shopping may look different for those with kids on their lists. We have discussed elsewhere which retailers we think will take Toys “R” Us’ share of the market.
Children have said they would like to receive dolls, plush toys and figurines. This holiday season, unicorn- and dinosaur-themed toys will be popular. The May release of Jurassic World: Fallen Kingdom has contributed to the hype around dinosaurs. Poopsie Slime Surprise Unicorn, a doll that releases glittery slime, is one of the hottest items on Amazon’s Top 100 Toys.
Beyond unicorns and dinosaurs, figurines in general make up many of this year’s most desired toys and we expect sales to be strong. Of JCPenney’s Top 20 Toys, 11 are figurines, and Target also highlights many in its Bullseye’s Top Toys. In pricier gifts, child-suitable tech products such as Nintendo Switch and hoverboards will be in high demand this season. We have discussed the holiday season’s hottest holiday toys in a separate report.
Over half of US holiday shoppers plan to purchase gifts online, according to Prosper. Walmart has rolled out a virtual experience for children that simplifies the shopping process for parents. Walmart’s Toy Lab enables children to select, unbox, and play with toys, deciding which ones to add to their virtual gift lists. This service allows children to explore toy options more thoroughly than is possible in their boxes in stores, and it saves parents the trouble of taking kids to a large retail store.
Self-Gifting a Growing Trend
Value offerings are convincing shoppers to self-gift while shopping for others, especially when the discounts warrant the purchase. We saw this pattern during Black Friday and Cyber Monday, as shoppers rewarded themselves for proactive holiday shopping. Self-gifting is up 13% over last year. Some 30.6% of consumers’ weekend holiday gift purchasing was spent on themselves. Young millennials (ages 18–24) spent 44% of their expenditure on themselves over the shopping weekend, according to the NRF and Prosper. Black Friday has been dubbed “Me Friday” by some commentators because of the boom in self-gifting this year.
Experiences will be popular gifts, as the giver and recipient can share the experience. Vacations, shows and sporting events are all popular experience gifts and popular gift cards. Even certain dining experiences are coveted holiday treats.
Discount stores such as Five Below are likely to see more self-gifters. Five Below features items that cost up to five dollars, targeted primarily at children and teens—but also carries many adult products that parents may add to their carts for themselves. As the holidays draw nearer and more discounts roll out, many shoppers will be inclined to buy a few extra gifts for themselves.
Most consumers say they would like to receive gift cards this holiday season, according to Prosper. Many popular gifts allow for a significant amount of customization, such as subscription boxes.
As of the end of the Thanksgiving weekend, almost half of US shoppers had completed less than 25% of their shopping, and 23% had not even started.