It seems this holiday shopping season is kicking off with a not-so-cheerful start. Holiday sales growth is expected to slow for the second consecutive year as lingering inflation, high interest rates, and student loan repayments loom over consumers.
It’s not all doom and gloom, though. Despite economic pressures, the growing consensus is that consumers will spend, and holiday sales will grow.
- PwC projects spending to increase by 7% YoY, with an average expenditure of $1,530 on gifts, travel, and entertainment.
- According to Deloitte, holiday sales are likely to increase by 3.5% to 4.6% with consumers planning to spend an average $1,652 this season, surpassing pre-pandemic figures for the first time.
- Insider Intelligence predicts a 4.5% growth in US holiday sales this year, making it the sixth-fastest increase in the last 15 years.
Online sales will surge this holiday season
E-commerce is expected to play a major role in holiday sales this year. According to Deloitte, e-commerce sales are expected to reach $210 billion to $218 billion during the 2023 holiday season, accounting for up to 50% of all holiday sales. The reason? More and more people have shifted their shopping habits online, mobile shopping has gained popularity and social media platforms are increasingly used to discover and purchase products.
For shoppers, online retailers are providing more convenience, such as free shipping and easy returns on their purchases. Not only that, but people can easily compare prices and products from different retailers, a critical point-of-focus given over 75% of shoppers will be looking out for deals this holiday season, according to PwC.
Winning the competition for customers
The competitive e-commerce landscape combined with the increased demand for discounts means brands and retailers must shift their strategies to accommodate changing consumer behavior. How can they bring the magic shoppers are looking for?
- Offer competitive prices – Consumers are feeling the pinch of inflation, and they are looking for ways to save money on their holiday purchases. This means retailers need to offer competitive prices and value-added deals.
- Run targeted campaigns – With a growing number of online shoppers, retailers can collect more data about their customers, allowing them to target them with more relevant offers. Use social media, email, paid ads, or Rakuten’s Personalized Rewards to reach shoppers who are most interested in your products and services.
- Adopt flexible payment options – Consumers will lean on flexible payment options like Buy Now, Pay Later (BNPL) to stretch their holiday budget. This encourages spending, especially on high-value carts or big-ticket items, as consumers can more confidently pay overtime.
- Make it easy for shoppers to return or exchange items – Shoppers want to know that they can easily return or exchange items if they’re not happy with them. Brands must ensure their return policy is clear and easy to follow.
This holiday season, consumers have options. Customers will move on to other brands if they can’t find what they are looking for (and at the right price). Savvy brands will understand the importance of meeting their customers where they’re at and invest in strategies that keep shoppers engaged and their brand top of mind.
Get in contact with a Rakuten representative to connect with engaged shoppers this holiday season.