James Russo, Vice President of Marketing, The Nielsen Company
SUMMARY: Santa’s not the only who made a list and checked it twice. Consumers patiently waited for the best possible bargains this past holiday season, even delaying purchases until the New Year in hopes of additional savings. In-home entertainment options along with the affordable luxury of going to a movie were big winners.
Nielsen analysts proved prophetic with a U.S. October holiday forecast that called for a holiday dollar sales gain of 4.4% or $98 billion across grocery stores, drug stores, mass merchandisers and convenience stores. The final numbers proved forecasts to be nearly on target—within 1.4% of actual results—for all channel dollar values ($99.5 actual vs. forecasted $98.2 billion). Unit sales, while on par with the -0.5% predicted decline, actually fared better than expected—increasing 34% year-over-year with total volume levels reaching 36.6 billion versus the forecasted 36.3 billion. The slightly lower predictions reflect a conservative set of economic assumptions, and an even more pronounced rise in commodity prices than anticipated, which bounced pricing up and units down.
The categories that drove the highest sales spikes during the 2008 holiday season were as predicted—chock full of gift-giving items and holiday baking confections. Musical instruments and accessories topped the list with more than half (52%) of the purchases for the year made in the eight weeks ending December 2008: women’s and children’s fragrances, baking supplies/ingredients and computer electronics products were also perennial holiday favorites.
|Consumers sought entertainment closer to home...|
Consumers looking to reduce expenditures sought entertainment closer to home in 2008, logging more hours in front of the TV, gaming device or DVD player. In fact, 10% of all homes purchased new home entertainment equipment during the 2008 holiday season versus 9% last year. Televisions accounted for more than one-third (35%) of all new home entertainment equipment purchases, with almost two-thirds of those sets comprising high definition units (64%). Digital converter boxes for analog TVs represented 9% of equipment sales.
Video game consoles added up to 18% of entertainment equipment purchases, with DVD players contributing an additional 11% of sales. VCR sales fell off the sales map with a less than 2% acquisition rate. Altogether, the four most popular devices (TV, digital converter boxes, video game consoles, DVD players) racked up nearly 75% of all equipment purchases.
DVD sales nosedived during the last eight weeks of 2008, falling some 14% over prior year results. Standard definition DVD sales plummeted by 18%, negatively impacting category performance despite the 255% increase in high definition Blu-ray disc sales. All DVD genres, with the exception of fitness, lost ground when compared with the same period in 2007.
Sales of new DVD releases were down by 23%, TV-on-DVD dropped 21%, theatrical releases plunged 14% and catalog sales edged down by 7%. The top 10 titles still account for roughly one in five DVD sales.
Just like football, it’s the fourth quarter that counts in the gaming field. That’s when the blockbuster gaming titles like Gears of War 2, Dead Space, Fable II, Guitar Hero: World Tour and Fallout 3 got released, in anticipation of the holiday shopping cycle. Males played roughly twice as many days per month during the November/December 2008 holiday season as females on the Xbox 360 console, with a much narrower disparity between genders in usage days on the Wii and Playstation 3.
|Wii is successfully broadening the gaming market to get at newer gaming audiences...|
Wii is successfully broadening the gaming market to get at newer gaming audiences beyond the hardcore 18–24-age segment. For females, the heaviest usage comes from the 25–34-age range and for males, the console skews younger with the largest percent of use coming from 6–11 year olds. PS3 users skew older than the typical gaming demographic, perhaps attributable to gamers who 'grew up' with Playstation, the oldest of available consoles, or the cost, which might 'price out' younger buyers.
|Music videos and digital tracks rose by 10.5%...|
The music industry recorded mixed results for 2008. While overall music sales for albums, singles, music videos and digital tracks rose by 10.5% in 2008 on a year-to-year basis per Nielsen, total album sales including CD, CS, LP and digital albums were down 14%. And holiday season (11/17/08–12/28/08) sales dropped further to -19%.
Offsetting the downturn was a 27% jump in digital track sales and a 32% spike in digital album sales for the year. Holiday digital album sales gave reason to celebrate, climbing 37% to 9.9 million units sold during the holiday season. When it comes to holiday song preferences, the classics still dominate with Rockin’ Around the Christmas Tree by Brenda Lee retaining its number one position, followed by the Burl Ives song, A Holly Jolly Christmas, and Nat King Cole’s rendition of The Christmas Song in third place.
Pundits often refer to the movie business as recession-proof. That sentiment proved true once again in 2008, with box office receipts climbing 11% to $1.655 billion during the November/December holiday season. Holiday favorite titles during the 2008 season included Madagascar: Escape 2 Africa, Twilight, Quantum of Solace, Four Christmases and Bolt.
Books are a perennial favorite idea for a last-minute stocking stuffer, with Christmas week registering the only year-over-year sales increase for adult non-fiction (up 25%) and fiction (up 14%) book sales. Children’s books remain a favorite purchase, with sales increases for each of the last eight weeks of the year. Popular titles included Outliers by Malcolm Gladwell, A Mercy by Toni Morrison, and The Tales of Beedle the Bard by Harry Potter series author J.K. Rowling.
|Nielsen measured a 10% increase in Black Friday web traffic...|
Black was back—for online
Black Friday—the day after Thanksgiving, often thought to portend the state of the holiday shopping season—delivered black ink and solid bottom lines for online retailers. Nielsen measured a 10% increase in Black Friday web traffic over the prior year, with 31.7 million unique visitors clicking on more than 120 representative retailer web sites.
Consumer electronics plugged into consumer interest, posting a 219% increase in unique audience numbers over 2007. Other categories making a strong online showing included shopping comparison portals (traffic up 83%), toys and videogames (up 73%), home and garden (up 53%) and computer hardware/software (30%).
Analysis of online discussion forums and blogs by Nielsen revealed that consumer thinking about Black Friday centered on incentive-linked language such as 'deals', 'sales' and 'doorbusters'. Fully 81% of online holiday shoppers read online customer product or retailer reviews, saying the write-ups made them more comfortable with purchase decisions.
Retailers who responded to the desire for discounts reigned, with eBay, Amazon, Walmart Stores, Target and Best Buy topping the list. In an anomaly, Circuit City posted an extraordinary 352% spike in traffic, likely associated with one-of-a-kind store closing discounts on merchandise.
|Cyber Monday kicked off with a 10% increase in web traffic...|
Cyber Monday kicked off the first full holiday shopping week with an equally strong showing, logging a 10% increase in web traffic to the Holiday eShopping Index over 2007 results. The beauty category recorded an attractive 151% rise in unique audience growth, followed by toys and videogames with a 112% increase and apparel, up 58%.
Product reviews are one mechanism for attracting buyers. Advertising is another. Nielsen measured the reaction of 20,000 viewers to retailer holiday ads from November 17 to December 14 and determined that the most appealing spots either told a story, tapped into emotions, focused on the kids and family or delivered a practical message, though not necessarily a price-based one.
Walmart’s 'register lights on' commercial was the most-likeable retail ad; with an index of 171 (a score of 100 is average for a retail commercial during the period). Macy’s ads nabbed the second and third most-likeable spots, with a nostalgia ad scoring 155 and celebrity readings of 'Yes, Virginia, there is a Santa Claus' rating 154.
All in all, marketers who remained sensitive to consumer sentiment, delivering either a substantive value or comprehensive experience, fared well during the holidays. Consumers were willing to spend money in categories that delivered on the product promise, satisfying a deep-seated consumer need or want at a fair market price. Moving forward into 2009, this is a lesson well-learned to remain competitive as the economy continues its downward spiral.