As the holiday season approaches, consumer shopping habits are shifting to earlier purchases and retailers are scrambling to get ready for what may be a blockbuster fourth quarter.
As consumer shopping habits evolve, the Black Friday to Cyber Monday (BFCM) weekend is projected to set a new record, with U.S. retail sales anticipated to surpass $75 billion.
Bain & Company forecast a 5% year-over-year growth for this crucial period, outpacing the overall holiday season growth estimate of 3%.
While Black Friday remains the crown jewel of sales days, the once-dominant Cyber Monday is losing its luster as consumers favor convenience and look for deals beyond the traditional shopping weekend. The day before Thanksgiving has also emerged as a noteworthy shopping event.
To give perspective to this trend, Aaron Cheris, partner in Bain’s Retail practice and one of the authors of the research, shared his insights during an interview with PYMNTS.
A Potential Record
“The holiday calendar is a key driver, with a later Thanksgiving and the couple of days before Christmas not landing on prime shopping days of the week, there is less time to shop between Thanksgiving and Christmas, which has driven higher Black Friday sales based on our analysis of credit card data,” Cheris said. “Additionally, based on our latest consumer surveys, approximately 55% of consumers plan to do most of their shopping in November.”
The second factor, Cheris said, is supply-driven, with the continued set of retail offers available online (with online share continuing to outpace stores and not just waiting until Cyber Monday anymore).
“One swing factor — and a recent development — are the port strikes,” Cheris said. “Some consumers may now decide to shop earlier from fear of not being able to get the gifts they want.”
This raises important questions about how evolving shopping habits will shape retail strategies, particularly as the relevance of Cyber Monday diminishes.
“Moving forward, a critical retail strategy will be personalization, and this will be most applicable online first, where retailers who have great data and the decision engines to apply it well can better tailor marketing messages, gift lists, email campaigns, and offers to individuals to ultimately drive inspiration and conversion,” Cheris said. “Retailers can no longer think of online as fully separable. They need omnichannel offerings and strategy throughout the season versus being able to run a discrete online promo calendar.”
Personalized Retail
This emphasis on personalization is echoed in a PYMNTS Intelligence report, “Personalized Offers Are Powerful — But Too Often Off-Base,” which highlights how effectively targeting consumers can significantly impact retail success. The report shows 71% of shoppers received personalized offers and are interested in them. An additional 12% did not receive personalized offers but are interested in them.
This perspective heightens the need for retailers to adapt their strategies.
“On one side, retailers need to operationally be staffed and stocked to meet the spike in demand over the BFCM weekend so that they meet customer expectations and can take advantage of the traffic they will be getting,” Cheris said. “On the other side, retailers should be strategic about trying to build profitable baskets around the deal items versus having the headline items be the only things in the cart. Retailers should be refining their promotion strategies that maximize conversion without discounting too much.”
This dual focus on operational readiness and strategic promotion is critical as eCommerce is expected to be a significant driver of holiday retail growth in 2024, rising between 7% and 9%, totaling between $289 billion and $294 billion during the holiday season from November to January.
Given the projected late-season shopping spikes, retailers must prioritize optimizing their inventory and enhancing in-store experiences to effectively meet consumer demand.
“Retailers should focus on seasonal talent first so that they are staffed with seasonal talent who they have trained up in the stores and fulfillment centers,” Cheris said. “At this point in the season, retailers are mostly where they are going to be on inventory, so the key is to allocate it properly and restock effectively as shelves get shopped. Given the recent port strike there may not be much retailers can do on inventory now. Ideally, they have received much of their holiday stock. Otherwise, they may need to pivot to more expensive logistics that could dampen their ability to offer the right discounts.”