Black Friday and Cyber Monday are gone. Desperate December is here.
It's going to be another interesting holiday shopping season as retailers jockey for position for the seasonal spending sprees. Where will buyers go? What will they buy? I've been such a good boy this year that Santa has presented me with a crystal ball a few weeks early.
What do I see? Let me go out on a limb and predict a few things that I expect to happen as this season plays out.
1. Tablets Will Be Hot -- Even for Kids
Last month's release of the Kindle Fire at $199 and the Nook Color at $249 created new price points for consumers who'd figured that $499 iPads were the only way to go with tablets.
The cheaper touchscreen gadgetry is starting to leave a dent in Apple (AAPL) as analysts are scaling back their iPad 2 projections for the current quarter. Sterne Agee's Shaw Wu now sees Apple selling just 13.5 million tablets during this holiday quarter, well below the 15 million he was originally targeting. Canaccord Genuity's T. Michael Walkley slashed his target from 14 million units to 13 million units.
This doesn't mean that tablet sales are finally faltering. Apple will still sell nearly double the 7.3 million iPads it sold during last year's holiday quarter. If anything, the recent revisions to iPad targets are largely the result of the success of the Amazon.com's (AMZN) Kindle Fire and moves by less successful tablet makers to clear out their excess devices at unprofitable price points. The Kindle Fire is positioned to sell millions this season, making it a distant yet definite silver medalist in this booming market.
However, it's not just grown-ups who are angling for tablets in their stockings. The most popular item on Walmart's (WMT) layaway program as of mid-November was LeapFrog's (LF) LeapPad, a $99 "learning tablet" for children between the ages of 4 and 9. It won't let your kids get on YouTube or any other website, but parents can download interactive learning apps for the rugged touchscreen tablet that comes with a camera and a microphone to inspire toddler creativity.
2. Layaway Will Be a Flop
Sensing that cash-strapped shoppers may need to save up for their presents this year, Walmart brought back the layaway option that it had scrapped five years ago. In exchange for a $5 service fee, Walmart shoppers with minimum orders of $50 are able to set aside items they want, paying for them in weekly installments. It isn't until they pay in full that the items are handed over.
It's easy to see why layaway went away. Credit card usage and shoppers disciplined enough to stash away the money they need make paying a $5 service fee silly. It gets worse. If a shopper can't come up with the necessary money in time, Walmart slaps on a $10 cancellation fee.
It's not just Walmart. Sears Holdings' (SHLD) Kmart has a similar fee structure for its layaway plan.
I get it. Credit's getting tight these days. Layaway may make sense for shoppers in October for toys that will be scarce in December. Retailers bear costs in holding back merchandise for layaway shoppers. However, this ultimately feels like something that the media will eventually play up as a tax on the poor. Even if the economy is still in a funk next year, don't look for layaway to be as widely available.
3. Amazon will Keep Outpacing the Online Market
As big as Amazon may be, it's still surprisingly nimble. It seems that when the holiday sales tallies come out, the leading Web-based retailer will be growing at a faster clip than its collective peers.
Net sales climbed 36% at Amazon during last year's holiday quarter, ahead of the nearly 26% increase that marketplace specialist Mercent Corp. estimates across all online retailers. There's no reason to expect that to change this year.
Yes, the competition is getting smarter. Amazon's no longer the only virtual storefront wooing buyers with free shipping promotions. Industry tracker comScore pegs free shipping as accounting for 63% of all sales made during the week of Cyber Monday, ahead of the 51% shipped for free during the same week in 2010 and 44% in 2009. It even finds that nearly half of today's shoppers have abandoned an online checkout screen once they realize that they're not getting free shipping.
It doesn't matter. Amazon will continue to outpace the market.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Apple and Walmart Stores. Motley Fool newsletter services have recommended buying shares of Walmart Stores, Apple, and Amazon.com; creating a bull call spread position in Apple; and creating a diagonal call position in Walmart Stores.