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Home Goods And Beauty Segments To Experience Most Growth This Holiday Season

  • Written by Alicia Fiorletta

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The holiday shopping season began on a positive note, with retailers across categories experiencing a healthy boost in sales. But the winning category through the New Year will be home goods, followed by beauty, according to research from IBM.

The newly released The IBM Holiday Forecast analyzed 22 years of consumer spending data to help pinpoint long-term trends and seasonal peaks of various retail categories. Results indicated that in-store sales for home goods retailers will experience a 6.46% boost — the highest of all segments researched — during November and December 2012, compared to the year prior. This may be because “consumers are focusing more this holiday season on what they need, rather than what they want,” such as items for the home, according to Jill Puleri, VP, Global Retail Industry Leader for IBM Global Business Services.

“We’re seeing more people spend money on what they need for their homes, which is really driving that boost in home good sales,” Puleri said in an interview with Retail TouchPoints. “One reason for this change is that as adult children graduate from college and face a tough job market, many are returning back home to live. This rise in multigenerational families promotes the concept of ‘nesting,’ and is causing the desire for a great home environment to become more prevalent.” 

Keeping these insights in mind, retailers in this category should refine assortment, promotions and staffing quickly and efficiently to make the most of this trend during the holiday season, Puleri reported. “We always hear that ‘home is where the heart is,’ and consumers are living by this mantra now more than ever. This will be the holiday of non-frivolous buying as consumers give gifts that truly matter to their families and friends.”

Beauty retailers also are expected to have a lucrative fourth quarter, with sales expected to improve 7.83% versus 2011, according to the IBM holiday research. The category has had a consistently strong year, with total annual sales expected to increase by 10.84% over last year, Puleri noted.

Demographics is one reason for this rise: “Generally, people seem to be taking better care of themselves, especially the Baby Boomers,” she stated. “As this consumer group continues to age, we are seeing a parallel increase in beauty and skin care products.”

Additional predictions from IBM for category sales this holiday season versus the same period in 2011 include:

  • Apparel (+2.49%)
  • Appliances (-7.14%)
  • Children’s (+1.31%)
  • Electronics (-2.83%)
  • Sports/Hobbies (+4.35%)
     

“The economic downturn and resulting trend in non-frivolous buying is prompting consumers to shift category spending,” Puleri explained. “When one category goes up, another goes down. Retailers should strive to understand these trends and put more science into the art of retailing to help maximize their marketing and inventory strategies throughout the year.”