CTA: 5 Things To Expect in Tech for the 2016 Holidays
More U.S. consumers than ever—68 percent, or roughly 170 million people—plan to buy technology gifts this holiday season, a six percent increase over last year, according to the annual research from the Consumer Technology Association (CTA). According to CTA's holiday retail forecast, spending on tech will increase 3.1 percent to reach $36.05 billion during the 2016 holiday season. With the 2016 holiday season upon us and shaping up to be a record-breaker for tech, here are five things to expect:
How will the Presidential election impact the holiday?
The past few years, retailers have attempted to pull the holiday season earlier and earlier into September and October but these efforts weren't well received by consumers. Last year, the bulk of holiday advertising started on Nov. 1, which I believe will mark the beginning of the holiday shopping season from now on. However, this year will be a little different. Presidential elections tend to crowd out other advertising by bidding up the cost of advertising spots, and I expect the same to happen this year. With Election Day on Nov. 8, I expect holiday promotions to hold off until Wednesday, Nov. 9, when there will be an instant barrage of ads.
This election will impact not only when consumers begin to shop but, potentially, how much they spend. According to CTA’s 23rd Annual Consumer Technology Holiday Purchase Patterns Study, despite the 2016 holiday shopping season shaping up to be a record-breaker in terms of both overall retail spending and tech purchases specifically, consumer apprehension remains. Among consumers who report planning to spend less on gifts this holiday season, 38 percent cite concerns about the presidential election outcome among reasons they plan to buy less.
Black Friday will be more pronounced (but less meaningful) than before.
Black Friday now runs a week long and it defines if the holiday season is good or bad. Expect there to be a very strong focus in 2016, given the later start to the holiday season. Black Friday week was historically several distinct periods, such as Thanksgiving Day, Black Friday, Cyber Monday, etc., that have morphed into one long episode. The pre-Black Friday period will see heavy promotions. Physical stores that have experimented with early opening on Thanksgiving evening, and even 24-hour sales events, will cut back to more traditional Friday morning openings. Filling their place will be focused online promotions that will ramp up Wednesday evening before Thanksgiving, and throughout Thanksgiving Day and into Friday as physical stores open.
‘Manufactured holidays’ will help define the holiday season.
Last year, many retailers released their holiday advertisements two weeks in advance of Black Friday. However, in 2015, they also offered Black Friday pricing on some of the items in their circular. I expect the same to happen again this year. These promotions will come right after the election. I call these sales events, "manufactured holidays." They are traditional holidays, but consumers anxiously anticipate these sales events, even when they might not initially expect to shop these sales. Amazon, with Prime Day, as well as Alibaba’s Singles Day, have shown the effectiveness of these manufactured holidays. I expect others to look for similar promotional opportunities. Flash sales and other manufactured sales periods will help keep up momentum and consumer attention on periods outside of Black Friday.
Online shopping will dominate this year’s holiday season for retailers.
Thanksgiving has become one of the most important online sales days of the year, and Black Friday has become a hugely important online week. Promotions, from free shopping to same-day delivery, will be a key purchase motivation for consumers. Retailers will also promote in store pickup. Online sales growth will far surpass all other channels. According to CTA’s holiday retail forecast, overall retail sales in November and December, excluding gas and restaurant sales, are expected to increase a strong 3.8 percent to $824.8 billion year over year. CTA also estimates total online holiday sales will grow by 16.4 percent to $84.2 billion, while online sales through mobile devices like smartphones and tablets will grow by 45.2 percent to $20.1 billion.
Connected devices will be a key holiday gift in 2016.
Manufacturers are producing, retailers will promote, and consumers will be buying tech that connects devices and other objects (i.e., consumer IoT). A record-high number of consumers plan to buy a new, emerging-technology product as a gift this holiday season. The most popular gifts among emerging tech will be:
- Wearables (27 percent of consumers plan to buy), led by smart watches (17 percent) and fitness activity trackers (15 percent)
- Smart home devices (24 percent), including smart thermostats (10 percent) and digital assistant devices such as Amazon’s Echo (six percent)
- Connected or digital toys (11 percent)
- VR headsets (10 percent), with several tech leaders introducing VR headsets to the market, CTA projects sales of 700,000 during the holiday season
- Drones (nine percent), with projected sales of about 1.2 million units this holiday season (up 112 percent over 2015)
Additionally, we also will see “expanding ecosystems” with 4K Ultra HD and virtual reality being popular for the holidays. Of those indicating they might buy a TV as a gift this holiday season, 56 percent expect to buy a 4K UHD TV, and CTA estimates holiday shipments of 4K UHD TVs will total 4.5 million units in the U.S.
Check out CTA.tech/holiday for all of CTA’s holiday and Black Friday research during the holiday season.