Lessons Retailers Can Take From the 2014 Holiday Shopping Season

As the sales figures from the 2014 holiday season were announced, there was lots of discussion about what they meant. It appears that December numbers were lower than expected, but the totals for November and December increased respectably over the same period from 2013, shored up by solid online sales.

Lower-than-projected December figures fueled speculation about the causes, including changing gas prices, the economic recovery, the earlier start of seasonal promotions, and the compacted shopping time between Thanksgiving and Christmas. It's important for retailers to comb through these numbers to understand what really happened, because holiday sales are so essential to a healthy bottom line.

Two outcomes are abundantly clear: online sales are robust, and mobile shopping is a growing force. Online shopping exceeded even relatively optimistic projections. comScore's combined November and December figures for purchases from desktop computers show a 15 percent increase year-over-year. IBM pegs total online sales at 13.9 percent higher than last year, including a 27.2 percent surge in mobile sales. In addition, Cyber Monday was the busiest day of the holiday season ($2 billion spent). The following day logged the second highest online shopping sales ($1.79 billion), and Dec. 8 came in third ($1.61 billion).

So what lessons can retailers take from last year's holiday shopping season? Obviously, December wasn't a big disappointment for online retailers. Also, mobile shopping is an accelerating trend. Worldwide, e-commerce sales (B-to-C) are expected to top $1.7 trillion in 2015, with mobile commerce reaching $300 billion. And the impact of mobile goes well beyond actual sales. Many holiday shoppers used their smartphones and tablets to research products, plan shopping trips, locate deals and share their wish lists.

Mobile shoppers have high expectations. They're savvy surfers, adept at price comparisons, and impatient with clunky sites and apps. Their experiences from prior holiday seasons directly impact their behaviors the next year. For example, holiday shoppers are increasingly wary of shipping guarantees. Many speculate that people shopped earlier this year to avoid late-arriving gifts. Consumers also know that promotions will start early and persist throughout the season, so while Cyber Monday is still a big success, it's becoming harder to convince savvy shoppers that the best deals are limited to one day or two days.

As for macro-economic trends, it's imperative that retailers learn to read between the lines in order to better direct their marketing efforts. Many are making intelligent use of customer data analytics as a powerful predictive tool.

For instance, why didn't lower oil prices and "improved economic indicators" lead to blockbuster holiday sales as expected? Tuned-in retailers may already know that for large swaths of the lower and middle classes, the on-the-ground realities of accumulated debt, stagnant wages and higher food costs washed out any savings from cheap gas.

Being squeezed by the recession for so long has caused many shoppers to adopt more conservative spending habits. It appears that many of those who used extra cash to shop on Black Friday and Cyber Monday discounts did so for practical reasons, replacing home appliances, furniture and electronics. Gleaning such insights from customer data can enable more effective marketing efforts, inventory forecasts and demographically targeted promotions.

Online-only retailers have some advantages (e.g., troves of customer data), and 2015 is the year to capitalize. Use it or lose it, as they say. In 2011, sales by web-only retailers passed web sales by retail chains for the first time. Web-only retailers continue to grow much faster than their brick-and-mortar counterparts, steadily widening the gap each year. Many retail giants like Target are just now going through a digital transformation by adding e-commerce experts to the C-suite, pouring money into mobile shopping sites and apps, and updating inventory systems to handle the omnichannel challenge.

While the big guys play catch-up, the digital natives (i.e., those who never operated on a brick-and-mortar business model) are continuing to gain traction. E-commerce retailers should focus on improving what they already do best — building appealing, fast, easy-to-use websites and apps; integrating social media; and securely fulfilling orders anytime, anywhere.

Online retailers also have much room to improve, and we have to make significant advances if we want to stay competitive. Consumers expect better service, faster deliveries, personalized promotions and micro-targeted marketing. There's growing momentum for e-commerce and retail in general, and we can expect an unprecedented level of innovation and optimization this year, especially when it comes to mobile shopping.

Deepak Agarwal is the CEO of NoMoreRack.com, a multicategory online retailer.