You’ll Never Guess What Category Will Lead Holiday Shopping This Year

Hint. It isn’t something you can put under the tree. Super Saturday, which was just a few days ago, might have delivered retail sales, but what’s really driving revenue for retailers this holiday season is  experiences. Sarah Quinlan, SVP and Group Head of Market Insights for MasterCard Advisors shared her observations in the last days before Christmas MPD CEO Karen Webster which include the impact of the never-ending discount on consumer shopping behavior and what experience sector she believes will have a very Merry Christmas this year.

KW.  Last Saturday was Super Saturday, also known as Panic Saturday. How panicked were the shoppers?  Did they visit the stores?

SQ:  They absolutely did.  People are out shopping very much but it is a steady shopping season.   We have seen steady shopping from the beginning of November, the week of Thanksgiving, the beginning part of Thanksgiving, the 4 days of the weekend, Cyber Monday and this trend has continued on.  Shoppers have also been known to go all the way to December 31st.   People aren’t shy to put a picture under the tree now instead of the actual gift. There is a real, “Let me find value for money and go out and get what somebody really wants.”

KW: That’s an interesting observation.  I have to say that I was not out on Panic Saturday, but I was out last week and I was really surprised at how uncrowded the malls were. I asked the various store sales associates as to whether or not this was just an unusual evening or whether it had been quiet the entire season.  They said that foot traffic was down – but yet the economy is strong.  What’s going on?

SQ: Well again, I think this goes back to a theme that you and I have discussed before, which is experiential spending.  If we look at spending, for example for the month of November we saw that restaurants were the number one category with lodging being number three.  We don’t normally think of this.  You might have stayed for a couple of days at your family’s home for Thanksgiving but the fact is people are traveling every day.  It’s become this experiential economy with some goods thrown in.   We are still spending and spending is up year on year, but we are just spending on different things.

KW:  Another comment that I heard from a lot of stores owner is something that you have also referenced : People aren’t shy about putting a picture under the tree.   They believe they’ll get a better deal later.  Now that’s also interesting since the financial crisis is a distant memory, but are people still conditioned to look for the best deals?

SQ: Yes, and I would actually thank the retailers for that because they have cut and cut and cut so people don’t know where the floor is anymore.   The urgency to buy no longer exists.  If anything some of the retailers that are doing better are those who have created the sense of uniqueness and that there’s only so much of given merchandise in the light.  That is really what the consumer is seeing.  That’s why jewelry has been up 21 months in a row.  It’s a unique purchase. It’s not something that other people can easily copy.   This is exactly why people like it, because it makes them feel special, unique, something that’s memorable to them and that I believe will continue to be the trend.

KW:  Another interesting factor is the shift between offline physical store sales and online store sales.  .  Should retailers really care where the sales are coming from?

SQ: I don’t think they should.  Retailers have acknowledged that the consumer is in charge and they will shop where they want and when they want. The point is that people value time more than anything and this is huge. Online is either a great content provider to help shoppers focus before making a purchase in the physical store or it is the place where the transaction is executed. Shoppers need to be given the flexibility of these options. In fact I was asked this question earlier today, “Does this apply to luxury retailers?” It does.  The luxury shopper is not someone who has free time all the time but is a working woman as well. This is the reason that flexibility becomes the premium that she is willing to pay for.

KW:  As we are approaching the Christmas holiday and the end of the year for the retailer.  Will it be a good season for them?

SQ:   It depends on the retailer type.  We are still predicting and are very confident with our number of 5.5% total retail sales growth year over year for the holiday season, which is the month of November and December. However, I will put the caveat in that we are expecting the number one sector to be restaurants for that period.  It will be good, but it may not be good for the seller of traditional physical merchandise.

Sarah Quinlan, SVP and Group Head of Market Insights for MasterCard Advisors

Sarah Quinlan is the Senior Vice President and Group Head of Market Insights for MasterCard Advisors, the analytics and insights consulting unit of MasterCard. Since joining MasterCard in January 2013, Sarah has advised executives in a range of industries, including retail, banking, capital markets, and government agencies, providing macro-to-micro economic trends related to consumer spending and retail sales. She and her team analyze and predict spending patterns, based on the billions of anonymous purchases MasterCard processes every year, to create solutions that help clients make better business decisions.

Sarah is widely recognized as an expert in her field and appears regularly in the media including CNBC, the Associated Press, Fox Business Network, Bloomberg TV, the Times of London, The Daily Telegraph, and Women’s Wear Daily (WWD). She is also a frequent speaker at prominent industry conferences such as the Financo CEO Forum, Milken Institute summit, WWD CEO Summit and 100 Women in Hedge Funds.

Prior to joining MasterCard Advisors, Sarah was the Founder and CIO of Katen Capital, a global macro hedge fund manager. Previously, she was the Chief Investment Officer and Head of Alternatives for Saad Financial Services, S.A. Before her role with Saad, Sarah was a portfolio manager at UBS, and at Lloyds TSB focusing on alternative investments. She was co-founder and portfolio manager of TwentyFirst Century Advisors, a small and mid-cap long/short hedge fund which was ranked in the Top 10 of Mar Hedge. She was also the co-founder and Chief Operating Officer of ClienTec, a thin client computer company which was sold in 2000. She began her career at Salomon Brothers Inc. in mortgage sales and trading. Sarah received her BA and MBA from the University of Chicago in Politics, Economics, Rhetoric and Law with Special Honors and in Finance and Accounting, respectively.

Listen to the full Podcast here