Retailers should take a more positive view of the upcoming holiday season.
Tis (almost) the season for holiday shopping.
With so much uncertainty in the air surrounding the state of the U.S. economy and the impending election, many are left wondering whether 2024 sales will be as robust as years past.
Americans generally feel negative about the economy although inflation has fallen and consumer spending remains strong. Economist Paul Krugman explores this disconnect in a New York Times article, noting that, “widely cited explanations of negative economic perceptions are inconsistent with observations that go beyond consumer sentiment,” and, “the only hypothesis that seems to work across the board involves the narratives people hear and see rather than their own experience.”
Some retailers echo this negative sentiment. For example, a recent CommerceNext survey by Forrester found 80 percent of retail companies think consumer spending on gifts and holiday products will decrease this year.
Despite this, I think there’s reason to believe this holiday shopping season won’t be much different than years past. In fact, if Amazon’s record-breaking Prime Day 2024 numbers are any indication of consumers’ willingness to spend, holiday sales could potentially reach an all-time high.
The fact is, retailers will always encounter challenges during top selling seasons, whether it’s supply chain disruptions, an upcoming election, or some other factor. Retail companies need to prepare their command centers early and be ready to adapt to changing conditions — this year and every year. Inventory for the holiday season for most retailers is ordered and en route,
Let’s unwrap three predictions for the upcoming holiday shopping season, including how retailers can prepare:
- Retailers will experience a high influx of orders in a shorter time frame
With just 27 days between Thanksgiving and Christmas this year, retailers are contending with a truncated shopping season (Fun fact: Cyber Monday will fall on December 2nd!). This means retail companies will receive a high influx of orders over a brief time period, which can create logistical challenges when it comes to inventory management, shipping cut-offs, and temporary staffing.
Being proactive and adaptable are key to overcoming these obstacles. By now, retailers’ product buying and allocation strategies should be cemented, and they should be mapping out their strategy for hiring temporary supplemental labor for their stores, distribution centers, and call centers. Bear in mind that this shorter runway means there will be less time to conduct training and hiring cycles, so starting early is paramount.
Additionally, retailers are already on the cusp of starting to warm up their algorithms and marketing channels for early learnings. Now is the time to conduct meaningful testing and explore new marketing channels to better target customers and increase sales during this shorter selling window.
- The impending election won’t have a significant or lasting impact on holiday sales
It’s fair to reason that a contentious election could negatively impact holiday spending, but research shows elections don’t have a measurable impact on consumer behavior long-term. In fact, following the 2016 election, holiday spending hit a five-year high.
While spending may temporarily decrease during the election process itself, it generally rebounds shortly thereafter. Additionally, both current presidential candidates have previously held office in some capacity, so there’s even more reason to believe the election will have little impact on holiday shopping.
That being said, any number of factors (an election or otherwise) can temporarily impact consumer behavior, so retailers always need the ability to pivot quickly. They can do so by adopting tools that let them make intra-day changes to their website, promotion strategy, variable marketing costs, and more.
Adjusting one’s sales strategy weekly won’t cut it in today’s dynamic world, especially when unpredictability is at play, so retailers need tools that empower end-users to make quick website changes, as well as flexible marketing tools that allow for several adjustments to be made throughout the course of a day.
- Promotions (in part powered by AI) will reign supreme
Consumers will be seeking out deals this holiday season due to their generally gloomy economic outlook–but they will still buy. Therefore, retailers must create a strong promotional strategy that helps them increase average order value, acquire new customers, and obtain as much revenue as possible from existing customers–the core to a successful selling season.
Retail companies are increasingly turning to AI-powered solutions to create and push promotions (and pricing) that are highly personalized and resonate with more customers. Most consumers can attest to the efficacy of today’s expertly targeted promotions: it can be difficult to scroll through Instagram or Gmail without being tempted to make a purchase — and AI is to thank for that.
AI-driven tools are also invaluable for ensuring the efficient and timely fulfillment of said promotions. AI significantly improves buying and allocation cycles so retailers don’t hurt their margins by shipping merchandise around multiple times to meet demand. If not already table stakes, these innovations are soon to be simply core to retail.
There’s no telling exactly how this year’s holiday shopping season will unfold, but sales will likely remain constant. No matter the year, retailers will always encounter new circumstances and challenges. The only way for retail companies to stay ahead in today’s constantly evolving market is by adopting tools and strategies that empower them to take an agile, proactive approach to selling year-round.