How Will Data Breaches Affect Holiday Shopping?
Holiday shopping is just around the corner. Americans are clearing the balances from their credit card accounts, making their gift lists, and waiting for the sales to start. But the slew of retail data breaches over the last year may have some shoppers concerned about where to spend their money. How will data breaches affect holiday shopping?
Shoppers Concerned about Stores with Data Breaches
A recent study showed many consumers are hesitant to shop at stores that have reported data breaches. The survey indicated 45% of consumers will “probably not” or “definitely not” shop with a retailer that has been recently hacked, even if that store is one they go to on a regular basis.
Despite these intentions, you have to wonder if it will hold up once the Black Friday ads show up in newspapers. Target in particular is known for having great sales on toys and electronics, to the point that many consumers may override their queasy feelings toward Target. Some consumers may turn to competing stores like Walmart because they have not reported a data breach, but chances are that stores with good sales offers will still make good profits.
Cash Becomes More Desirable Than Credit Cards
Most consumers don’t like the idea of bringing a wad of cash with them to do their holiday shopping, especially if they want to buy big items like televisions. Nevertheless, cash may be king this year because of the data breaches. Consumers who want to shop in breached stores without compromising their credit card accounts may choose to leave their plastic at home this year.
Target, Home Depot, and Neiman Marcus are just some of the stores that have been affected in the past year by credit card hacks. Shoppers may turn to cash for their transactions at those stores to take advantage of the low prices.
Internet Sales Expect to See Substantial Growth This Year
Shop.org predicts a growth of 8% to 11% for holiday shopping online this year, totaling as much as $105 billion. This is a significant portion of the $617 billion the National Retail Federation is projecting for total holiday sales in 2014.
While it would be easy to say this increase is a result of recent data breaches, that may not be the case. Last year, Shop.org predicted a growth of 13% to 15% in internet sales without any data breaches involved. The growth for 2014 is more likely the result of America’s growing dependence on the Internet and the overall convenience of shopping for items online. 2013 was the first year to have more than $1 billion in online Black Friday sales, and sales this year could surpass that record.
Wealthy Consumers Keep Their Holiday Shopping Plans in Spite of Data Breaches
Only 31% of consumers from households earning at least $75,000 per year said they probably would not shop at compromised stores, compared to 56% of consumers from households earning less than $30,000 per year. This could prove promising for retailers because the shoppers with the most money to spend will be the least likely to take their business elsewhere during the holidays. The National Retail Federation still expects holiday sales to grow by 4.1% this year, even with issues in the economy and concerns about data breaches.
So, how will data breaches affect holiday shopping? For some consumers, it won’t at all. Others may change stores or change payment methods to protect themselves, but they will still spend money somewhere on Christmas presents.