While the 2022 season centered on boosting profits amid a tough economy, Salesforce’s holiday shopping forecasts reveal that 2023 is primarily focused on ensuring the satisfaction of loyal customers.
The effects of worldwide economic circumstances, ongoing inflation, the emergence of buy now, pay later choices, and customers’ preference for discounts will influence the 2023 holiday shopping season. Here, you’ll discover eight-holiday shopping forecasts within this article.
Holiday Spending Grows Less Than 5%
In 2023, the global economic situation remains unfavorable. According to the research firm Numerator, over 50% of Americans are expressing concern about inflation and the potential for further economic slowdown. Among “holiday celebrators,” 22% anticipate a significant impact on their shopping due to inflation worries, while 31% expect a moderate impact.
Moreover, Salsify, a product engagement platform, estimates that 90% of global consumers in 2023 are adopting cost-saving behaviors.
These factors indicate slight growth in holiday sales, probably below 5%. Assuming an annualized inflation increase of around 6% in the final quarter of 2023, this projection suggests that while total sales might rise, the growth may not truly represent an increase in real terms, as inflation would have driven up the overall amount spent.
This prediction contradicts a previous trend. In 2022, most retail experts foresaw total U.S. retail sales growing by less than 6%. However, the actual outcome was an increase of over 8% in retail sales.
Holiday shopping is commencing earlier than it has in previous years
The preceding year, 2022, demonstrated that holiday shopping is no longer confined to November and December. Major retailers initiated Black Friday and Cyber Monday deals as early as October, prolonging holiday sales and promotions throughout the fourth quarter.
A survey conducted by Google revealed that by mid-October, global holiday shoppers had already finished an average of 21% of their shopping.
This year, retailers and shoppers seem to follow the same trend, indicating that early holiday shopping is becoming the new standard.
Thanks to autumn promotions such as Amazon’s Prime Early Access Sale, the ecommerce growth rate in October exceeded that of November and December, experiencing a significant 9.8% surge in 2022. This shift, combined with events like “Black Friday in July,” highlights that consumers are shifting their holiday spending to an earlier time and anticipate retailers to adapt accordingly.
Retailers should be prepared to seize attention early and adopt an “always on” marketing approach.
Good return experiences are keys
The holiday season offers a prime opportunity for brands to engage new customers and cultivate loyalty among existing ones. However, crafting an unforgettable post-purchase journey is the key to retaining these customers.
This translates into providing a straightforward and effortless returns process for many customers. It’s no surprise that higher holiday sales often result in increased returns. Last year, approximately 10% to 16% of ecommerce orders in the U.S. were returned weekly from November through mid-January.
While a significant number of returns might seem like they could be better, it represents a substantial opportunity to showcase to your customers that their well-being matters to you beyond just their spending. A FedEx study revealed that 98% of shoppers would consider buying from a brand again if it offered fast and convenient returns, and 56% would be willing to pay for hassle-free returns.
Instead of solely concentrating on the purchasing experience, ensure that you provide a generous return timeframe and an intuitive returns process.
Returns should possess the following qualities:
- Transparency: 93% of shoppers research a brand or retailer’s return policy before purchasing.
- Convenience: 81% of shoppers have ceased purchasing from a brand or retailer due to a single negative return experience.
- Fairness: 78% of shoppers had abandoned a shopping cart when free returns were not an option. Additionally, 30% stated that receiving a refund instead of store credit impacted their purchasing decisions regarding where and when.
Inferior return experiences stemming from policies and processes might jeopardize 21% of online orders.
Buy Now, Pay Later is a potential option
Certain shoppers will choose “buy now, pay later” financing for their last-minute purchases, peaking at 9% just before Christmas.
This prediction indicates a significant, and likely expected, increase from 2022 when buy now, pay later sales comprised 7% of all online orders.
Unfortunately, the rise in consumer debt often points to underlying economic issues. In the initial quarter of 2023, the total household debt in the United States reached a record high of $17 trillion. This growing debt marked a 0.9% increase from the fourth quarter of 2022 and is $2.9 trillion higher than at the end of 2019, prior to the pandemic recession.
If your ecommerce store currently does not offer a buy now, pay later option, consider adding one.
Discounting drives sales
In 2022, the holiday shopping season was fueled by discounts and deals.
Despite concerns about rising inflation dissuading shoppers, retailers significantly reduced prices to attract gift buyers.
On Black Friday, which witnessed U.S. holiday sales totaling $11.3 billion according to Adobe, electronics were typically offered at an average discount of 29.8%. Similarly, toys were available with an average discount of around 33.8% on that day.
While discounting on Black Friday is not a novel occurrence, the discounts observed in 2022 were both prolonged and notably more profound in many cases. Numerous retailers offered discounts in the double-digit range, even reaching up to 34%.
Although inflation rates are decreasing in the U.S. and globally, it wouldn’t be surprising to witness ongoing discounting in 2023. Retailers will likely be tempted to replicate the strategy that proved successful the previous year, catering to price-conscious shoppers.
AI will influence digital sales
The spotlight on GPT and other generative AI models is capturing attention this year, and these tools are becoming mainstream. According to research, 17% of consumers have utilized GPT for product research and inspiration, while 10% are likely to employ it for crafting their holiday shopping lists.
Predictive AI has already played a crucial role in the online shopping journey. Ecommerce merchants and digital marketers have been using AI-generated product recommendations for years, offering consumers suggestions on product pages, in shopping carts, and beyond.
With the rise of generative AI, which utilizes human prompts, algorithms, and data to generate fresh and original content like text, images, and music, we anticipate retailers enhancing personalized shopping experiences.
Brands and retailers will adopt this technology during the holiday season, leveraging customer data to create more customized, valuable shopping experiences that foster loyalty. The most notable impacts will be in:
- Marketing: Streamlining marketing campaigns and creating content for emails, landing pages, text messages, social media, and apps.
- Commerce: Introducing conversational site search for a more human and intuitive approach to discovering the perfect gift across digital platforms.
- Service: Crafting more nuanced and human-like chatbot responses capable of understanding, predicting, and effectively addressing inquiries.
BOPIS will boost sales
After three years of online shopping due to COVID-19, customers are eager to return to in-store shopping.
According to eMarketer, brick-and-mortar holiday spending reached a historic $1 trillion in 2022, marking a 3.9% increase from 2021. Foot traffic during the Thanksgiving weekend also rebounded, showing a 17% year-over-year increase over the five days. Particularly noteworthy, Black Friday witnessed a double-digit surge in traffic, with 72.9 million shoppers, underscoring the revival of brick-and-mortar shopping.
So, how should e-commerce businesses respond to this industry shift? – By embracing an omnichannel strategy that seamlessly bridges the gap between online and offline channels.
Fortunately, several services like “Buy Online, Pickup in Store” (BOPIS), “Buy Online, Return in Store” (BORIS), and “Reserve Online, Pickup in Store” (ROPIS) are simplifying the process for retailers to blur the boundaries between digital and physical shopping.
In the 2022 holiday shopping season, twenty percent of online orders were fulfilled using BOPIS, and this increased to more than one in three after the shipping cutoff dates.
An economic crisis results in careful expenditure
While it’s the season for shopping, data indicates that many shoppers might be tightening their holiday budgets.
Even though inflation has decreased year-over-year, CNBC’s Supply Chain Survey reveals that 71% of retailers anticipate consumers reducing their spending due to inflation. Consequently, 43% of retailers intend to order less inventory compared to the previous year. Additionally, Wall Street foresees a potential U.S. recession in the next 12 months, possibly starting as early as November – the official commencement of the holiday shopping season.
What does this signify for retailers during this holiday season? Discounts, discounts, and more discounts.
Amid economic uncertainty, it’s evident that holiday shoppers are seeking opportunities to save. 67% of retailers anticipate consumers actively searching for discounts this holiday season. While this might entail sacrificing certain margins and profitability, offering discounts is crucial for meeting customer demands this season.
That’s all our advice for e-commerce businesses to ensure that your customer takes center stage in your e-commerce strategy. Whether it’s providing offers and markdowns or improving the omnichannel journey, discovering methods to prioritize your customer is crucial for distinguishing yourself this holiday season.