Every year, the major consulting firms publish their predictions for holiday shopping. This time around, there are several confounding factors at work. First, there are fewer shopping days between Thanksgiving and Christmas. There is concern about the Middle East conflict and its potential impact on oil prices. And the recent presidential election.
The consensus seems to be overall consumer spending will increase roughly 3% for holiday 2024 shopping. That forecast is down from a 4% increase last year, and a 5% gain in 2022. With inflation, that means that real unit volume will be about flat. And some product categories are likely to do better than others, with retailers in home furnishings, home improvement, sporting goods and department stores forecasted to experience modest sales declines (1-5%). Electronics, appliances and health and beauty stores probably will be flat. Clothing and grocery shopping are projected to be up slightly, while e-commerce sales will be up strongly (+5% or more, all according to Bain & Company analysis). Online sales will account for about 20% of all holiday spending in 2024, a new high.
With many households facing tight budgets due to inflation, promotion and discounting will be even more prolific. It seems to start earlier every year as retailers want to get a jump on capturing their share of the consumer’s holiday wallet. Amazon’s Prime Day in October kicked things off with many deals available via online channels and for a limited time only. Cyber Monday after Thanksgiving has evolved into a major phenomenon. Expect to see exclusive products, partnerships and promotions throughout the holiday season. And many of those deals will be available on weekdays vs. weekends. Free or discounted shipping offers can be compelling ways to motivate purchases.
Some households are expected to take advantage of “buy now, pay later” offers in order to get that perfect gift. With borrowing costs down somewhat this year, consumers may take on more debt, particularly if their disposable income is up a bit. Take home pay has increased for some, and this year’s stock market gains provide a boost to spending plans for higher income households.
The number one theme for both retailers and brands is value, particularly to make Q4 sales budgets. So, pricing and promotions will play a large role in success or failure compared to years past. Having enough inventory is another key consumer purchase criterion. Product quality is expected to play a bigger role this year, as is the omni-channel shopping experience (e.g. buy online, pick up at a local store). Interestingly, online reviews from other shoppers are expected to be less of a factor this year. Seamless returns and timely shipping remain as table stakes.
Implications
For those of you who have holiday specials lined up, execution is key! Get the product to your customers, and if you have in-store displays or collateral, make sure that work is done as promised. Stay on top of daily sales so that you can respond appropriately if revenues are above expectations, as you may be able to ship more to restock holiday displays.
Then once the season is over, do a thorough assessment of what worked and what didn’t.
- Did you hit the right price point?
- Were the holiday art design and materials impactful enough to break through the clutter?
- Did you take full advantage of trends in consumer preferences?
- Did you do everything you could to make it easy and personal, with thoughtful suggestions for gift lists or product selection (maybe even use some AI in your online offerings)?
- Did you have enough well-trained staff in place across your enterprise to handle the surge in transactions, whether those sales were online or in-store?
- Did you get your content and messaging right across all touch points?
At Damen Jackson, we have helped clients hit home runs when it matters most. Regardless of the time of year, we put a premium on prudent planning and smart decisions. We have the benefit of over 25 years of working with almost 800 clients to help your brand shine no matter what. Our experienced team is there to augment the know-how of your leadership team, stimulate productive debate, put hard working plans in place, and grow your business.
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