Last call for holiday shoppers: The December Push is on

December is shaping up to be a make-or-break month for the retail industry. While consumers are expected to spend throughout the holiday season, they will also be more discerning in their purchasing decisions, continuing to take advantage of deep discounts and waiting for the best deals. Retailers, therefore, must maintain a presence in the final weeks to maximize sales and maintain customer loyalty.

Holiday 2023: Where we’re at

This holiday season is marked by unprecedented deep discounting and a heightened focus on value. Unlike recent years, where consumers were driven by impulse purchases and urgency driven by inventory and supply chain challenges, this season is characterized by a wait-and-see approach, with shoppers meticulously planning their purchases to maximize savings.

Below, Rakuten provides the current outlook and strategies to consider as we head into December.

Consumer spend this season is driven by an increased demand for deals. A recent report from Adobe shows retail has seen another strong pull forward of spend this season. October online sales reached nearly $77 billion dollars. That’s up almost 6% year-over-year, representing $4B more than last year and setting a record. While the overall market performed well in October, certain categories, particularly electronics, were the primary drivers of this growth. Early bird deals like Amazon’s Prime Day and an influx of compelling Buy Now, Pay Later (BNPL) offerings further fueled sales.

Shopping has sustained. Despite the pull forward of spend, the buying season is still strong.

• November 1^st – November 20^thsaw $63.2B in total retail revenue.
• Black Friday shoppers spent a record $9.8B in U.S. online sales, up 7.5% from last year (CNBC).
• Cyber Monday spending reached $12.4 billion, per Adobe Analytics – up 9.4% year-over-year (YoY).

This year, the discounts are deeper. Continued economic pressures and concern over an anticipated “humdrum” holiday season are contributing to a “move it now” strategy. Early Black Friday discounts were far higher this October compared to prior years, according to CNBC. Both the depth of discounts and the total amount of items on sale were higher in October compared to the last four years.

Consumers are using flexible payment options like Buy Now, Play Later to stretch their budget. As of November 28, $7.3 billion have been spent on Buy Now, Pay Later (BNPL) this season according to Adobe’s real-time report.

Consumers are waiting for retail holidays and events to shop the best deals. Consumers waited for the steep discounts that came during the Cyber 5. Discount rates rose to 28% globally and 29% in the US on average per Salesforce. Similarly, advertisers smartly waited to push their most competitive discounts and their marketing dollars.

Consumers are expected to remain deal-conscious throughout December, holding out for strong offers and incentives. And it seems retailers will deliver. Looking at Adobe’s real-time holiday shopping report’s daily discount trends, we can see the discounts becoming more compelling the further we get into season. Discounts rose in the days leading up to Cyber Week with offers over 20% in many categories including toys, electronics, and apparel. To date, post-Black Friday deals linger well above 20%.

The December Push

Consumers officially kick off their holiday shopping in October, but starting is not the same as finishing. December is when they will complete their final purchases, making it a crucial period for retailers to capture their attention and drive the sale. While early starts are important, it’s December that will determine whether or not retailers achieve their holiday goals.

Shoppers will continue to spend through December seeking last-minute gifts, capturing post-holiday deals, and taking advantage of the unprecedented deep discounting likely to still be happening. In fact, December moments like Green Monday and Rakuten’s Champion Buyer Event show strong performance. Last year, brands that participated in Green Monday saw a 76% increase in sales, a 63% increase in trips, a 53% lift in orders, and a 15% lift in average order value (AOV) when compared to non-participants. This is further amplified when we look at Green Monday’s Champion Buyer Event. Participating brands saw an additional +20% increase in sales and a +30% increase in trips when compared to merchants that only participated in the base promotion.

For brands and retailers, the role of December is to capture those last-minute shoppers and focus on retention and sustaining attention for Q1.

Despite the allure of early-bird and Black Friday / Cyber Monday deals, consumers still shop through December. The National Retail Federation (NRF) found nearly 60% of shoppers plan to finish their holiday shopping in December this year. For comparison, 58.6% of shoppers made December purchases last year according to the NRF. Retailers should capitalize on the fact that a considerable amount of spending still left in the season. This is not the time to go quiet, rather, as consumers rush to complete their shopping lists, brands should capitalize on this demand by staying in front of active shoppers and nurturing the ones they acquired over Black Friday and Cyber Monday.

December is an important time to foster customer relationships and brand loyalty. Many consumers are still actively engaged in gift-giving and making purchases or exchanges, brands can leverage this momentum to nurture their audience and lay the foundation for a successful first quarter.

78% of Rakuten Cyber 5 shoppers return to shop in December

Keeping pace with retail, Rakuten sees a strong pull forward of holiday shopping behavior. Our shoppers continue their spending through December as they snag those last-minute gifts, treat themselves to goodies, and take advantage of post-holiday deals. Last year, Rakuten saw YoY December growth driven by high-intent shoppers that started before Black Friday and kept shopping. Nearly 80% of our Cyber 5 shoppers returned to shop Rakuten in December. We anticipate 2023 shoppers will stay engaged as they look for the next round of discounts and deals following Black Friday and Cyber Monday.

Cash Back is a leading strategy for brands and retailers looking to push final sales and move inventory.

Cash Back has proven to be an effective tool for influencing consumer behavior. Using Cash Back as a lever, retailers can incentivize shoppers to make their purchases in the final weeks of the season, clear inventory off the shelves and generate more revenue.

Cash Back turns holiday shoppers into repeat buyers.

Of course, the holiday season isn’t just about getting people to buy during the peak period. The magic lies in retaining high-value customers, fueling repeat purchases, and building brand loyalty.

Cash Back is built for the long game of customer loyalty. Beyond peak holiday shopping, Cash Back helps nurture strong relationships with high-value customers. 70% of Rakuten shoppers stay with us, and 72% of Rakuten shoppers making second or third purchases do so within a month of their first purchase.

Seize December’s potential on Rakuten

The beginnings of holiday shopping have come and gone and we’ve entered the final push. Nearly 60% of holiday consumers will be finishing their shopping in December, making December a crucial period to meeting your Q4 goals.

Cash Back can be used to nurture high-intent customers, re-engage, and build loyalty. Winning attention and wallets in the homestretch of the season is an important steppingstone towards a successful Q1.  70% of Rakuten shoppers stay with us, and 72% of Rakuten shoppers making second or third purchases do so within a month of their first purchase.

To maintain attention and drive purchase this December, retailers must adapt their strategies. Here’s how they can win:

Re-engage Cyber 5 shoppers to drive frequency and loyalty. Nearly 80% of members that shopped Black Friday through Cyber Monday returned to Rakuten to shop in December 2022.

Use Personalized Rewards and Champion Buyer Events to reward high-intent shoppers and drive immediate purchase in December and repeat purchase in January.

Lean into strategies like buy-online pickup in-store (BOPIS) to offer a convenient and time-saving shopping experience, without additional costs or delays to win those last-minute shoppers.

Leverage Dynamic Cash Back Strategy to meet consumer demand and expectations around deal-seeking. Fluctuations in Cash Back can be used as a lever to drive full price efficiently for the business, while sustaining a consistent, competitive promo calendar. There are a few ways to think about how to approach planning the promo calendar with Rakuten:

1. Mirror your onsite promotions – Adjust rates in tandem with your onsite promos.
2. Between onsite promotions – Increase Cash Back to sustain rewards presence between your onsite promos.
3. Elevated Cash Back events – Reward shoppers with higher, exclusive rates to drive urgency and excitement.

Plan your December on Rakuten here. Not already working with us? Get in touch for more information on how Rakuten can help you win December moments.