With 53 shopping days remaining until Christmas, retailers and brands are preparing for a holiday season marked by heightened price sensitivity and evolving promotional strategies. In its 2024 Holiday Forecast, Salesforce predicts a 2% year-over-year global sales growth for November and December, totaling $1.19 trillion, with U.S. sales expected to reach $277 billion, also up 2% from last year.
As consumers tighten their belts, here’s what retailers and brands are expecting when it comes to online sales this holiday season.
Photo by Sean Gallup/Getty Images
Price Sensitivity Will Drive Discounting Strategies
Salesforce’s latest Shopping Index reveals a dramatic shift in consumer behavior: two-thirds of global shoppers report that prices will dictate where they choose to shop in 2024, up significantly from 46% of shoppers in 2020. The impact of discounting is clear – during the 2024 Prime Day event, retailers that meaningfully increased discount rates saw a 3% increase in U.S. sales and positive order volume growth for the first time in years, indicating significant pent-up consumer demand.
Brands are seeing this price sensitivity play out in real-time. Advantice Health, which owns the brands AmLactin, Triple Paste, and Kerasal, have seen greater success during tentpole events in 2024 compared to 2023. Ash McMullen, Director of Ecommerce at Advantice Health, believes this indicates greater price sensitivity from consumers.
Brands get Strategic With Product Selection for Promotions
Rather than blanket discounts, brands are becoming more selective about their promotional strategy. “It is rarely advisable to discount an entire catalog,” Laura Meyer, CEO of retail-focused marketing agency Envision Horizons, explains. “Instead, we recommend focusing on top sellers or new product launches to gain momentum and improve the Best Seller Rank on Amazon.”
Meyer’s firm has found compelling evidence for deeper discounts on selected products: “Over the past few years, we’ve observed that brands offering discounts of 30% or more during tentpole events experience a significantly higher sales lift, along with a greater ratio of new-to-brand customers, especially in the beauty category. Our testing has shown that offering a larger discount on top sellers, combined with a lower Total Advertising Cost of Sales investment (the Amazon equivalent of total Return On Ad Spend or ROAS), is more effective than staying below the 25% discount threshold.”
This selective approach aligns with broader profitability goals. “The biggest challenge we face in any promotional tent pole event is the balance of discount, profitability, and brand reputation,” McMullen notes. “As a brand, you need to be intentional about how frequently you run deal pricing; yet offer a lower barrier of entry for new-to-brand consumers frequently enough to drive profitable growth.”
McMullen emphasizes the importance of finance partnerships in navigating this challenge: “Understanding your ecommerce P&L is a game changer during tent pole event planning and execution. A major unlock for us has been ecommerce learning to speak finance language and finance learning to speak ecommerce language.”
An Expanded Holiday Calendar
While this year features five fewer shopping days between Thanksgiving and Christmas compared to 2023, retailers are effectively lengthening the season through extended promotional periods. This year, Amazon is re-casting the cyber week period historically known as ‘Turkey5’ into ‘Turkey12’ – more than double the duration of previous years. McMullen expects to see other retailers follow this extended deal period trend.
Brand participation is strong. Meyer reports that over 80% of her agency’s clients participated in Amazon’s October Prime Day event, but all clients are planning promotions for Black Friday and Cyber Monday.
As to how the balance will shake out with fewer days between the two national holidays combined with earlier discounting, Advantice’s McMullen believes there will be less of a lull between the Black Friday event and Christmas.
Innovation in Customer Retention
Brands with a DTC subscription model are getting creative with retention strategies beyond traditional discounting. Hattie Gilpin, Director of Operations at wellness brand Wellbel, reports a 20% save rate on subscription cancellations by strategically offering their Black Friday deals when customers request a cancellation of their subscription. This retains existing customers who hear about a new customer offer during a sale event. “This lets the customer know you’re thinking about them and that you’re not wanting to bait-and-switch them,” Gilpin shared on a recent episode of the podcast Limited Supply.
Wellness brand Wellbel will offer existing subscribers the same discount as new customers during its … [+]
Nik Sharma of Sharma Brands in turn suggests alternatives to straight discounting that can protect margins while still offering value to consumers. “Besides discounts which impact your gross margin, you can also consider cashback or offering a free gift with purchase, which increases the perceived value for customers without the same margin impact,” Sharma notes.
When it comes to Amazon, Meyer’s team has also found success with post-promotion retention strategies by leveraging Amazon Marketing Cloud audiences to re-target high-value Prime Day customers in the months following the event.
2024’s holiday season requires a nuanced approach
The Salesforce perspective reinforces the importance of strategic planning: “This season will be competitive, intense, and no doubt focused on pricing and discounting strategies. It’s never been more important to leverage technology like AI and rely on your customer data for guidance and insight into marketing campaigns – especially the holiday promotional calendar – that keep your loyal customers buying more and buying from you,” says Caila Schwartz, Director of Strategy and Consumer Insights at Salesforce.
For brands and retailers, success this holiday season will depend on finding the right balance between meeting consumer price expectations while maintaining profitability. The expanded promotional calendar offers more opportunities to connect with price-conscious shoppers, but requires careful planning around product selection, discount depth, and customer retention strategies.