September 5, 2024
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How Will Holiday 2024 Shape Up?
Early forecasts for holiday spending are generally mixed due to uncertainty created by inflation effects, potential interest rate cuts, and a volatile election season.
Salesforce last week predicted a 2% year-over-year increase in sales over November and December in the U.S. this year. That represents a sharp pullback from a 3.8% gain in the 2023 holiday season and the 10-year compound annual growth rate of 4.2%.
The software giant, basing its analysis in part on data from more than 1.5 billion global consumers on retail sites using Salesforce products (including 29 of the top 30 U.S. online retailers), said the selling season “could be especially challenging for retailers as they compete for shoppers with less purchasing power than in past years.”
Salesforce noted that 43% of consumers are carrying more debt than they were in 2023. Salesforce’s survey data found two-thirds of global shoppers report that prices will dictate where they choose to shop in 2024 (up from 46% of shoppers in 2020), with less than one-third prioritizing the quality of the goods.
Salesforce also noted that the calendar isn’t favorable for retailers, with only 27 days between Thanksgiving and the day before Christmas — the fewest since 2019 — compared to 32 last year.
“This season will be competitive, intense, and no doubt focused on pricing and discounting strategies,” Caila Schwartz, director of strategy and consumer insights at Salesforce, said in a statement.
In a preliminary estimate, Craig Johnson, president of Customer Growth Partners, the research and consulting firm, forecast a holiday gain of between 2.5% and 3.5%. In an interview with WWD, Johnson said his forecast would represent a “so-so performance, but it’s positive, particularly in light of all the craziness with inflation and the whole jobs picture.”
“The consumer is still cautious,” he added. “No one is buying stuff unnecessarily, and when they do shop, they are approaching things much more strategically and that applies to the lower-end customer and the higher-end consumer. They are buying fewer units per basket, but consumers are resilient.”
Coresight Research’s early outlook projects sales from October through December will expand 4% year over year, with its latest holiday survey finding slightly more respondents planning to spend more this holiday season than less, compared to last year.
On a cautionary note, however, Coresight found that the share of consumers expecting their personal financial situations to be better for the forthcoming holiday season than one year earlier had weakened versus surveys taken in January 2024 and in June 2023. Coresight said, “Our surveys find consumer sentiment variable, but generally weak and having been on an approximate downward trend, likely due to the slower-than-expected unwinding of both inflation and interest rates.”
Coresight also sees SHEIN, Temu, and TikTok Shop grabbing holiday share from domestic retailers.
Most optimistic so far is eMarketer, which is predicting a gain of 4.8% year-over-year in November and December. Specifically, it expects e-commerce sales to increase by 9.5% year-over-year.
eMarketer’s bullish sentiment reflects a still “relatively healthy economy with fair GDP growth, a relatively solid (albeit softening) labor market, and waning inflation.” The forecast also reflects the Conference Board’s Consumer Confidence Index hitting a six-month high in August, and this confidence will “likely continue to rise if and when the Fed cuts interest rates.” Also cited was a Basis Technologies survey showing that 92% of U.S. consumers plan to spend at least as much this holiday season as last year, including 36% expecting to spend more.
eMarketer concluded, “We expect consumers will seize upon opportunities to stretch their budgets as they hold out for value and hunt for deals. Some may also turn to credit and flexible payment options.”
BrainTrust
Sarah Pelton
Partner, Cambridge Retail Advisors
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
David Slavick
Co-Founder & Partner, Ascendant Loyalty
Recent Discussions
Discussion Questions
What factors will play the largest role in determining whether the 2024 holiday selling season will be robust, adequate, or substandard?
What are the biggest unknowns?
Poll
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In retail terms, the holidays should provide retailers with modest growth, but sales will likely fall short of being spectacular. There just isn’t enough firepower in the consumer economy for an incredibly robust advance. This, however, is largely good news because it means that, despite all the challenges, there are still gains to be made.
As we have seen across the course of this year, the consumer is still showing up and opening their wallet for occasions and events. However, retailers need to work hard to coax shoppers into spending. That includes through discounts and deals and through interesting assortments. People are thinking much more carefully about what they buy, which means creativity is an important part of success for brands.
Consumer sentiment remains encouraging, however, the messages get muddled as political parties send out conflicting messages about the economy to bolster their own positions. Interest rate cuts by the federal reserve will help improve sentiment and this should keep consumers spending through the holiday season. Virtually all retail categories are seeing revenue pressure, so I would expect to see a very active promotional holiday season with many retailers getting an even earlier start given the shorten holiday calendar this year. Watch for Walmart and Target to set the pace, and Temu and SHEIN will continue to put pressure on Amazon. The big unknowns include the impact of the election and geopolitical events that can directly impact the supply chain.
I think the numbers will be pretty similar to last year, as long as retailers provide the strong discounts. Consumers want to spend when there’s deals- they’ve repeatedly shown that.
Presidential election years tend to cause uncertainty — until the election is decided one way or the other. And the inflationary headwinds seem to be subsiding while employment growth is decent. A cut in interest rates might stimulate the housing market, and related categories along with it.
Setting aside these macroeconomic effects, don’t forget the impact of merchandise content (and value) on the winners and losers of the annual market share game. If there is a hot toy or electronics item in demand, or if early cold weather drives seasonal categories, that can have a lot of impact outside of all the external forces.
Ah for the good old days, when we said “we’ll know the winner no later than the 5th”, we didn’t need to specify what month.
Factors affecting 2024 holiday sales include enticing pricing and early sales events’ ability to capture a shrinking amount of disposable income. Viral product trends, job stability and consumer optimism also matter. Competition will be even more intense with TikTok, Temu and SHEIN vying for market share..
Unknowns include the U.S. election outcome, and how it might affect economic policy, inflation and jobs.
Two sides of the coin. One, I am hopeful that malls, strip center and outlet physical store locations will have a nice rebound in sales now that we are truly “post pandemic”. The commercial real estate market needs tenants to succeed. I do not believe that interest rates, post election events and inflation will have any impact on consumers buying for themselves and for gifts. Regardless of how high personal debit is and awfully high interest rates on private label and co-brand cards, consumers will continue to spend to treat themselves and their loved ones. On the other hand, we will see winners and losers as so many chains have gone under and thus competition is not as fierce, thus we will see the survivors report exceptional YoY performance. Lastly, those companies with strong omni-channel capabilities, seamless experience and outstanding delivery solutions will continue to win plus the pure play eCommerce leaders. Lastly, the holidays are a time to surprise and delight your most valued identified customers – do something special for them and they will reward you with their loyalty in 2025. If you aren’t truly innovating, get busy!
Consumer sentiment is on the rise and hopefully that trend will continue through the holidays. Election and economic concerns may be a factor, particularly with reemerging volatility in container rates however the back to school season performance has been strong. If retailers hold to tactics on price point focus while executing healthy in stock rates we should see healthy growth.
Inflation may create the illusion that holiday spending is more robust than it truly is. After all, prices are currently 23% higher than they were on January 20, 2021.
However, if we hear in January that this year’s holiday season generated more revenue than any previous year, it could be misleading. Therefore, we should refrain from using dollar amounts as a reliable metric to assess the success of this holiday season.
There are additional complexities in evaluating holiday seasons. The days when retail store sales solely defined results are long gone. Approximately 18% of holiday purchases are now made online, while another 9% consist of gift cards or vouchers for various services, such as restaurants, Starbucks, Netflix, and Amazon. This shift makes it increasingly challenging to gauge the success of the holiday season.
Overall, I anticipate a decline this year due to recession concerns and consumers having fewer disposable dollars to spend. – Db
The success of the 2024 holiday shopping season, similarly to every holiday season, hinges on a lot of factors. First, consumer confidence is key—things like inflation, wages, and interest rates will impact how much people are willing to spend. Retailers also need to manage their supply chains, ensuring they have enough inventory and can keep shipping costs down. With shoppers being more price-sensitive, discounts and deals will play a huge role. E-commerce continues to grow, so having a strong online presence and offering things like curbside pickup will be crucial. On top of that, consumer trends are shifting, with many opting for experiences over physical gifts, and sustainability is more important than ever. Tech-driven personalization and innovations like augmented reality shopping will set retailers apart. Lastly, labor shortages and rising wages could affect in-store service. Retailers who balance these challenges will come out on top this holiday season.
Today, I read the first article that mentioned the US election as a holiday forecast and sales factor. I guess someone had to finally address the elephant in the room (see what I did there?) Presidential election years are one thing. 2024 is a loaded wildcard that has retailers and consumers playing it safe “until….”.
Forget interest rates, the election, the cost of gas, inflation and the labor market. Consumers are primed to spend at the holidays. As long as there are interesting items to buy & a steady diet of predictable discounting, shoppers will turn out. Because that’s what retail has trained us to do…online and off.
The season will be as it always is – except for 1932, of course – some will do well, some poorly, and there will be multiple reversals mid-season about how well things are going. On average, we’ll be…average.
I expect the season to get off to a slow start. We’ve observed this trend for a few years now: consumers are trained to wait and hope retailers start discounting. We’ve also seen Black Friday results soften over the years. This year, there are a lot of headwinds in the market. Uncertainty is undoubtedly at the top of the list. I hope that by the end of November, we’ll have some resolution there. We’re also looking at higher consumer debt, the continued impact of high fuel and food prices, and less certainty in the job market… I’d be happy with a flat holiday.
Value for money will be the dominant theme of the holidays. I think numbers will be similar to last year’s, but spending will be concentrated in a smaller number of major retailers.
Adding to everyone’s comments is the 4 week span between Thanksgiving and Christmas from 5 weeks last year. That always adds some drama.
The 2024 holiday season is rapidly approaching, and retailers should prepare for a dynamic and competitive market environment. With some economic uncertainties impacting consumer confidence, retailers must leverage their strengths and adapt to their customers’ changing preferences and expectations.
Retailers ready for the upcoming holiday rush have reason to be optimistic. Projections from the National Retail Federation suggest a 2.5% to 3.5% increase in retail sales for 2024, potentially totaling around $5.2 trillion to $5.3 trillion.
This festive season is expected to surge in e-commerce and omnichannel strategies fueled by evolving shopping patterns and ongoing inflationary impacts. Preliminary trends indicate that shoppers may begin their holiday purchases sooner than in past years, with promotional activities kicking off as early as October.
While economic factors like inflation and wage growth will significantly shape consumer spending, the holiday season is still expected to be positive for retailers. To succeed in this period of high consumer demand, retailers should proactively meet their customers’ needs by doing the following:
- Be the early bird – Communicating these personalized offers early, at scale, well before Black Friday will be key
- Lead with your best deals – Retailers who present their most attractive deals earlier will gain the advantage of heightened consumer attention
- Optimize your supply chain – By investing in real-time inventory tracking capabilities, retailers can ensure they plan carefully to avoid stockouts and meet demand
- Change the narrative around returns – With a strategic approach, returns insights can lead to profitable growth across the retail value chain, making it an area of potential opportunity for retailers.
The biggest factor for the 2024 holiday season will be consumer spending power, which is heavily impacted by inflation and interest rates. If inflation remains high and interest rate cuts don’t materialize, people will spend less, especially on non-essentials.
The other major factor is discounting—retailers will need aggressive pricing strategies to attract cautious shoppers. The biggest unknown is how confident consumers will feel, especially with potential political and economic instability.
Uncertainty around job security and rising debt levels may also impact spending decisions, making predictions difficult. Retailers need to be prepared for a tough season.
With inflation being high, consumer purchasing power will be strained and consumers will be trying to stretch their budgets by any means possible during the 2024 holiday shopping season. A retailers’ ability to stand out from their competition this holiday selling season will be the biggest factor in determining whether the season is a success or not.
The effective use of AI will be beneficial for retailers this shopping season as they seek to gain that competitive edge. As consumers focus more and more on factors like price, they will be looking for a clear path towards the products that they want and that fit their holiday budget. An AI-first search and product discovery platform can help create a frictionless shopping journey for consumers by improving search results, offering personalized recommendations, and ensuring that your customers can easily find the products they’re looking for at the right price.
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In retail terms, the holidays should provide retailers with modest growth, but sales will likely fall short of being spectacular. There just isn’t enough firepower in the consumer economy for an incredibly robust advance. This, however, is largely good news because it means that, despite all the challenges, there are still gains to be made.
As we have seen across the course of this year, the consumer is still showing up and opening their wallet for occasions and events. However, retailers need to work hard to coax shoppers into spending. That includes through discounts and deals and through interesting assortments. People are thinking much more carefully about what they buy, which means creativity is an important part of success for brands.
Consumer sentiment remains encouraging, however, the messages get muddled as political parties send out conflicting messages about the economy to bolster their own positions. Interest rate cuts by the federal reserve will help improve sentiment and this should keep consumers spending through the holiday season. Virtually all retail categories are seeing revenue pressure, so I would expect to see a very active promotional holiday season with many retailers getting an even earlier start given the shorten holiday calendar this year. Watch for Walmart and Target to set the pace, and Temu and SHEIN will continue to put pressure on Amazon. The big unknowns include the impact of the election and geopolitical events that can directly impact the supply chain.
I think the numbers will be pretty similar to last year, as long as retailers provide the strong discounts. Consumers want to spend when there’s deals- they’ve repeatedly shown that.
Presidential election years tend to cause uncertainty — until the election is decided one way or the other. And the inflationary headwinds seem to be subsiding while employment growth is decent. A cut in interest rates might stimulate the housing market, and related categories along with it.
Setting aside these macroeconomic effects, don’t forget the impact of merchandise content (and value) on the winners and losers of the annual market share game. If there is a hot toy or electronics item in demand, or if early cold weather drives seasonal categories, that can have a lot of impact outside of all the external forces.
Ah for the good old days, when we said “we’ll know the winner no later than the 5th”, we didn’t need to specify what month.
Factors affecting 2024 holiday sales include enticing pricing and early sales events’ ability to capture a shrinking amount of disposable income. Viral product trends, job stability and consumer optimism also matter. Competition will be even more intense with TikTok, Temu and SHEIN vying for market share..
Unknowns include the U.S. election outcome, and how it might affect economic policy, inflation and jobs.
Two sides of the coin. One, I am hopeful that malls, strip center and outlet physical store locations will have a nice rebound in sales now that we are truly “post pandemic”. The commercial real estate market needs tenants to succeed. I do not believe that interest rates, post election events and inflation will have any impact on consumers buying for themselves and for gifts. Regardless of how high personal debit is and awfully high interest rates on private label and co-brand cards, consumers will continue to spend to treat themselves and their loved ones. On the other hand, we will see winners and losers as so many chains have gone under and thus competition is not as fierce, thus we will see the survivors report exceptional YoY performance. Lastly, those companies with strong omni-channel capabilities, seamless experience and outstanding delivery solutions will continue to win plus the pure play eCommerce leaders. Lastly, the holidays are a time to surprise and delight your most valued identified customers – do something special for them and they will reward you with their loyalty in 2025. If you aren’t truly innovating, get busy!
Consumer sentiment is on the rise and hopefully that trend will continue through the holidays. Election and economic concerns may be a factor, particularly with reemerging volatility in container rates however the back to school season performance has been strong. If retailers hold to tactics on price point focus while executing healthy in stock rates we should see healthy growth.
Inflation may create the illusion that holiday spending is more robust than it truly is. After all, prices are currently 23% higher than they were on January 20, 2021.
However, if we hear in January that this year’s holiday season generated more revenue than any previous year, it could be misleading. Therefore, we should refrain from using dollar amounts as a reliable metric to assess the success of this holiday season.
There are additional complexities in evaluating holiday seasons. The days when retail store sales solely defined results are long gone. Approximately 18% of holiday purchases are now made online, while another 9% consist of gift cards or vouchers for various services, such as restaurants, Starbucks, Netflix, and Amazon. This shift makes it increasingly challenging to gauge the success of the holiday season.
Overall, I anticipate a decline this year due to recession concerns and consumers having fewer disposable dollars to spend. – Db
The success of the 2024 holiday shopping season, similarly to every holiday season, hinges on a lot of factors. First, consumer confidence is key—things like inflation, wages, and interest rates will impact how much people are willing to spend. Retailers also need to manage their supply chains, ensuring they have enough inventory and can keep shipping costs down. With shoppers being more price-sensitive, discounts and deals will play a huge role. E-commerce continues to grow, so having a strong online presence and offering things like curbside pickup will be crucial. On top of that, consumer trends are shifting, with many opting for experiences over physical gifts, and sustainability is more important than ever. Tech-driven personalization and innovations like augmented reality shopping will set retailers apart. Lastly, labor shortages and rising wages could affect in-store service. Retailers who balance these challenges will come out on top this holiday season.
Today, I read the first article that mentioned the US election as a holiday forecast and sales factor. I guess someone had to finally address the elephant in the room (see what I did there?) Presidential election years are one thing. 2024 is a loaded wildcard that has retailers and consumers playing it safe “until….”.
Forget interest rates, the election, the cost of gas, inflation and the labor market. Consumers are primed to spend at the holidays. As long as there are interesting items to buy & a steady diet of predictable discounting, shoppers will turn out. Because that’s what retail has trained us to do…online and off.
The season will be as it always is – except for 1932, of course – some will do well, some poorly, and there will be multiple reversals mid-season about how well things are going. On average, we’ll be…average.
I expect the season to get off to a slow start. We’ve observed this trend for a few years now: consumers are trained to wait and hope retailers start discounting. We’ve also seen Black Friday results soften over the years. This year, there are a lot of headwinds in the market. Uncertainty is undoubtedly at the top of the list. I hope that by the end of November, we’ll have some resolution there. We’re also looking at higher consumer debt, the continued impact of high fuel and food prices, and less certainty in the job market… I’d be happy with a flat holiday.
Value for money will be the dominant theme of the holidays. I think numbers will be similar to last year’s, but spending will be concentrated in a smaller number of major retailers.
Adding to everyone’s comments is the 4 week span between Thanksgiving and Christmas from 5 weeks last year. That always adds some drama.
The 2024 holiday season is rapidly approaching, and retailers should prepare for a dynamic and competitive market environment. With some economic uncertainties impacting consumer confidence, retailers must leverage their strengths and adapt to their customers’ changing preferences and expectations.
Retailers ready for the upcoming holiday rush have reason to be optimistic. Projections from the National Retail Federation suggest a 2.5% to 3.5% increase in retail sales for 2024, potentially totaling around $5.2 trillion to $5.3 trillion.
This festive season is expected to surge in e-commerce and omnichannel strategies fueled by evolving shopping patterns and ongoing inflationary impacts. Preliminary trends indicate that shoppers may begin their holiday purchases sooner than in past years, with promotional activities kicking off as early as October.
While economic factors like inflation and wage growth will significantly shape consumer spending, the holiday season is still expected to be positive for retailers. To succeed in this period of high consumer demand, retailers should proactively meet their customers’ needs by doing the following:
The biggest factor for the 2024 holiday season will be consumer spending power, which is heavily impacted by inflation and interest rates. If inflation remains high and interest rate cuts don’t materialize, people will spend less, especially on non-essentials.
The other major factor is discounting—retailers will need aggressive pricing strategies to attract cautious shoppers. The biggest unknown is how confident consumers will feel, especially with potential political and economic instability.
Uncertainty around job security and rising debt levels may also impact spending decisions, making predictions difficult. Retailers need to be prepared for a tough season.
With inflation being high, consumer purchasing power will be strained and consumers will be trying to stretch their budgets by any means possible during the 2024 holiday shopping season. A retailers’ ability to stand out from their competition this holiday selling season will be the biggest factor in determining whether the season is a success or not.
The effective use of AI will be beneficial for retailers this shopping season as they seek to gain that competitive edge. As consumers focus more and more on factors like price, they will be looking for a clear path towards the products that they want and that fit their holiday budget. An AI-first search and product discovery platform can help create a frictionless shopping journey for consumers by improving search results, offering personalized recommendations, and ensuring that your customers can easily find the products they’re looking for at the right price.