December has ushered in the most competitive time of the year for retailers. Black Friday sales were down 1.5% this year, putting more pressure on stores to finish the holiday season strong.
Even though there are only a few weeks left, there’s still hope for retailers. A majority of consumers continue holiday shopping after Thanksgiving weekend. In fact, our survey of over 500 holiday shoppers shows that 15% wait until the very last minute.
When Do Holiday Shoppers Shop for Gifts?
Of these last minute shoppers, more than two thirds intend to shop at Target (69%) or Walmart (66%). Competitors Macy’s and Nordstrom don’t come close, with 25% and 7% respectively.
When looking at all consumers working to get through their list, Target also wins; nearly 8 in 10 (79%) holiday shoppers who shop throughout November and December plan to shop there.
In Holiday Shoppers Just Don't Care if Retailers Open on Thanksgiving, we looked at the drivers of consumer choice regarding Thanksgiving and Black Friday shopping. This data is useful for retailers making business decisions about how to capture more consumers during the high-traffic weekend.
When it comes any holiday shopping, retailers have to understand the drivers of consumer choice in order to differentiate their promotional strategy and marketing messaging. After all, everyone is competing against the online shopping giant Amazon, right?
So, let’s dig in. According to our customer research, the factors most important to holiday shoppers when deciding where to shop are as follows:
Bah humbug! It’s all about easy access to good deals. Holiday atmosphere isn’t all that important to customers - even for those consumers who prefer to shop in-store. And despite the fact that mobile shopping has been such a hot topic, mobile payments and a useful mobile app still lag behind other key drivers of consumer choice.
Let’s look at how five major competitors compete for consumers. How can each capitalize on their unique competitive advantage to come out ahead this holiday season?
Target vs. Walmart – Battle of the Big Box Stores
When it comes to what’s most important to holiday shoppers, these two major retailers are considered to be pretty similar. Both have a strong presence in store and online. Consumers perceive them to be pretty on par when it comes to low prices, ease of finding what they need, holiday promotions and sales, large product selection, etc.
In general, Target is perceived as having more helpful staff, and Walmart wins on its price-matching policy.
But both of these stores have unique appeal to certain customer segments. For example, Walmart wins over men who wait until the last minute to shop because of its hours, free returns, and ability to purchase online and pickup in store:
However, female millennials prefer Target due to its helpful staff and ease of finding what they need:
Nordstrom vs. Macy’s – Winning over the Mall Shopper
Another retail battle happens in the shopping mall. With a smaller online presence, department stores such as Nordstrom and Macy’s not only compete to bring shoppers into the brick-and-mortar mall, but they also compete against each other for shopping dollars.
When looking at these department stores, several unmet customer needs were revealed, including ease of finding what shoppers need, free returns, ability to purchase online and pick up in the store, and low prices. (However, shoppers with a household income over $100,000/year are less concerned with low prices.)
Overall, Macy’s wins on two high priority factors: holiday promotional sales and being able to shop for multiple people in one place. On the flip side, those that plan to shop at Nordstrom value their helpful staff and return policy.
While both of these stores bring on the holiday cheer – with holiday music, decorations, and even visits from Santa – this falls outside Vennli’s yellow Customer circle, meaning it is not a key driver of consumer choice:
Also interesting is that “free returns�? is considered an unmet need by consumers at large, even though both stores have free in-store returns. Is it more about the hassle of needing to return to the store? (It would be interesting to dig into this finding more to see if improved messaging or an easier process could change negative customer perceptions and therefore increase sales.)
Best Buy – The Struggle is Real
Over the past few years, Best Buy has struggled to compete against online giants like Amazon and big box stores like Target and Walmart.
This year, competitors are directly attacking Best Buy’s traditional competitive advantage. For example, Target hosted big sales in electronics this Black Friday, offering 10% off in all electronics items. In fact, shoppers still looking for electronic gifts after Black Friday reported that Target wins on key factors such as low prices, large product selection, and the ability to shop for multiple people all in one place:
In this retail battle, who will come out on top?
Well, in the eyes of consumers, Target owns some key factors driving consumer shopping choice. It’s a strong competitor against big box giant Walmart and also beats Nordstrom and Macy’s in key factors such as low prices.
The determining factor will be how well each of these retailers plays to their strengths in order to differentiate themselves effectively in the eyes of holiday shoppers. They could employ operational or marketing and sales strategies. For example, Target has focused on free shipping through December 25th to attract online shoppers, but competitors, like Walmart, could have an opportunity to win over more last minute shoppers by pushing back deadlines for delivery by Christmas.
Other retailers are trying new things when it comes to their marketing approach. For example, Google’s opt-in, shoppable TrueView ads are hot, with predictions from Pixability suggesting retailers will spend up to 200% more on the channel at the end of 2015 than the same stretch last year. Walmart is projected to devote a total of $17 million to TrueView ads, five-times Target’s spend. Higher-end retailers are also upping their digital investment: Macy’s is diversifying its ad strategy to target Instagram users that engage with their ads, including retargeting on Facebook.
If the proof is in the pudding, then it will be interesting to see whether Nordstrom or Macy’s can pull out of their Q3 earnings slump as Target and Walmart continue to beat expectations. May the retailer with the savviest understanding of their customer needs win!