Whether you like it or not, the holiday shopping season is here.
Thanks to early promotions like Amazon Prime Day and Target Circle Week, shoppers no longer need to wait until Black Friday to start deal hunting.
Faced with a condensed purchasing period after a late Thanksgiving this year, 76% of U.S. consumers plan to get started on their holiday shopping before Turkey Day — with 40% having already started, according to coupon code website RetailMeNot.
Most shoppers say they want to help their budget and put some space between purchases, as well as to take advantage of sales and promotions. Others want an early start to avoid items being sold out and to reduce stress during the holidays, the survey found.
Even with falling inflation, consumers will remain selective about their discretionary spending. Fifty-nine percent say it is likely to affect their budget and 57% describe their finances as “strained,” PwC said in its 2024 holiday outlook.
Nonetheless, overall spending is projected to increase by 7% to an average of $1,638 per shopper, the firm said. PwC noted that the average “reflects both an increase in consumer activity as well as the lingering impact of inflation and its elevated costs.”
“While inflation has moderated from its 2022 peak of 8% to 2.9% in July 2024, the cumulative effect of price increases over recent years continues to influence spending patterns,” PwC wrote.
This year, holiday sales will surpass $1 trillion to reach a record high. However, that 3% growth falls below the 4% gain in 2023 and 5.2% gain in 2022, according to EY-Parthenon. Online shopping will continue its post-pandemic surge, with e-commerce predicted to account for around 20% of holiday purchases, the firm added.
Record-breaking year
Generally, analysts expect a record-breaking year for online sales. Of the $240.8 billion in online sales projected between Nov. 1 and Dec. 31, Adobe Analytics said more than half of those purchases will be made using a cell phone. Discounts are also top of mind for digital shoppers, especially deals on apparel, electronics, appliances and sporting goods, Adobe said.
When it comes to consumer purchasing power, Scott Auster, executive vice president and head of leasing for Urban Edge Properties, believes “all the general macroeconomic trends” will have an influence this year.
“Consumer spending slowing down to some extent, the impact of higher interest rates on the consumer and maybe less discretionary income this year are things that just more broadly we’re being mindful of with the makeup of our centers,” he said.
“I think that some of those headwinds from a macroeconomic standpoint are certainly a consideration and might be a benefit to us as consumers look for alternative places to maybe buy holiday gifts and still be able to get all the things that they want to get for their family and friends, but maybe by spending less money. That could benefit the tenants that we have, like Target, Burlington, Ross Dress For Less and the TJX brands – Marshalls and T.J. Maxx,” he said.
Auster went on to say, “It is possible that that could be the case, and we’d actually see an uptick in the spending in our shopping centers this holiday season as opposed to last.”
Matthew Harding, chief executive officer of Plainfield-based commercial real estate services firm Levin Management Corp., believes it “boils down to the economy and consumer confidence.”
“Both of those things seem to be good and positive. Inflation seems to be coming down and the unemployment rate is still low. And I think in terms of consumer confidence, we look forward to seeing some increased spending around the holiday season, barring anything happening worldwide,” Harding said.
Levin’s portfolio includes:
- Blue Star Shopping Center in Watchung, which features tenants like Kohl’s, Marshalls, Dollar Tree, The Children’s Place and ShopRite.
- St. George’s Shopping Center, a Rahway property occupied by retailers including T.J. Maxx, Pet Smart, West Marine and Ulta Beauty.
- Somerset Shopping Center, a Bridgewater site with stores such as Barnes & Noble, Gap Factory, Men’s Wearhouse and Norman’s Hallmark.
“Generally, the retailers that we see in our shopping centers are doing well. They’re out looking for more stores, which is a sign of the retailer’s confidence to add additional locations. And the fundamentals of the economy seem to be solid. I think the concept of a soft landing of the economy has really sunk in with people. The step that the fed took in decreasing rates helps boost consumer competence, which leads to spending,” Harding said.
Dashing to the store
Based on the findings of its 2024 holiday survey of more than 1,000 Americans, JLL predicted, “Consumers plan to budget big, enjoying the in-store shopping experience, stocking up on holiday décor and food and buying gifts for loved ones and themselves.”
Approximately 71% of shoppers will use two or more channels to cross items off their holiday lists and most will interact some way with brick-and-mortar stores — either by in-person shopping, picking up curbside or in-store, or a combination, the global real estate company said.
This year, 59.5% of the 1,000-plus consumers surveyed plan to shop in a store in an enclosed mall, compared with 40.8% in 2023, according to JLL. Meanwhile, 58.3% of respondents will go to a store not in an enclosed mall, up from 48.2% last year.
The average holiday shopper in 2024 has about eight recipients on their gift list. Most will visit between three to five stores per shopping trip and don’t expect to spend more than an hour at the stores during each visit, JLL said.
Given the trend of consumers shopping in physical stores, onsite experiences like holiday décor, live events and dining out remain important.
At Marlton Square, General Manager Anthony Palino said the Evesham Township-based lifestyle center is positioning itself as “a festive and charming go-to neighborhood stop for seasonal gift buying, holiday catering or entertainment needs, and on-the-go dine-in or take-out mealtime solutions” that makes shopping and planning an efficient yet enjoyable experience.
Palino said they’re looking forward to “enhancing the charm” of the property for the season with décor elements “that create a relaxed, inviting and festive holiday shopping atmosphere.” Besides a live grand tree adorned with twinkling lights and a menorah prominently displayed at the center of Marlton Square, Palino said there will be a mix of cheerful holiday music playing throughout the center.
There will also be giveaways on the center’s social media accounts throughout the season, he said. Marlton Square will host promotions to amplify small and local businesses on Small Business Saturday and throughout the season to highlight “all the ways our shops give back to the community,” Palino said.
For retail, on-site experiences have been “ramping up” for the last several years and are something that “can really just add to the holiday spirit and bring shoppers in,” Harding said.
And it’s not just during the holidays. Many properties are increasingly hosting pop-ups, festivals, concerts and other special programs throughout the year aimed at attracting foot traffic.
“Over the last few years, we’ve seen in architectural design working places into properties where you can hold events like that and designing around those needs,” said Harding, noting that it helps support gathering and placemaking.
Auster said, “I think that we’re definitely trying to elevate our environments and making them more holiday festive. There are certain things that we obviously do, such as ornaments and landscaping and the like.”
Although there’s been a rise in the number of permanent tenants at commercial retail properties, Auster said there will still be “a sprinkling” of seasonal stores and pop-ups at Urban Edge-owned properties. That includes Spirit Christmas at The Plaza at Woodbridge, a soon-to-open Christmas-themed shop from Spirit Halloween’s parent company.
Egg Harbor-based Spencer Spirit Holdings Inc. recently announced plans to launch the new concept starting next month with 10 locations across the Northeast. New Jersey will host nearly half of those shops – including a Mays Landing flagship.
A stripped-down trip
Auster said, “I think in our locations in particular, we’re seeing both a rise in sales, but also a rise in our foot traffic at our centers … Now, foot traffic takes on varying forms because we have all different types of uses in our shopping centers, and it’s not always around the type of traditional holiday shopping that you would see.”
At the real estate investment trust’s 33 strip centers across New Jersey, Auster said, “We have a lot of food and beverage, we have health care, we have fitness, and that’s driving some of our pedestrian growth.”
“The feedback that we’re getting from some of our more soft-goods type retailers, our discount department stores and our general merchandise retailers that sell in categories that would align with the holiday shopping season, at least, so far this year, [is] their performance on balance has been good. We’re seeing positive sales trends in our centers,” he said
“Leading into the holidays, there seems to be a lot of momentum in spending in the strip centers, in particular, that we think is going to carry through to the holiday season,” Auster explained.
“I just think the items being sought by consumers more generally are being offered by tenants that are occupying strip centers and that is a preferable shopping experience for them than going to the traditional malls because you’re in and out of there a lot easier, there’s convenient parking, there’s convenient access to the store and being able to get your goods in and out of there a lot easier,” Auster said.
“Strip centers are becoming more of a one-stop shop experience … and increasingly more categories of retail are locating in strip centers. And as that continues, I think more of the holiday shopping, whether it’s this year or in subsequent years, is going to be happening at the strip centers,” he explained.
With tenants like Home Goods and Burlington, strip centers are also poised to become a popular destination for increasingly budget savvy Gen Zers and millennials. “I think that it might’ve taken longer for them to embrace the treasure hunt experience and discovery of those stores because those stores, by and large, do not have much of an e-commerce presence,” Auster said.
“As the younger generation becomes consumers themselves, they’re getting their first job, they have some money to spend, they’re actually spending money on their own as opposed to their parents buying things for them,” he added. “They generally have found things historically online because that’s what they grew up on. They grew up on online shopping, so it’s taken them a little bit longer maybe to discover some of the more traditional brick and mortar brands that don’t have an e-comm presence.
“But once they have, there’s a real experience that could be had around that,” he said. “They post on social media the things they found in the brick-and-mortar stores when they were shopping. So, it does filter back to social media and not necessarily e-comm, but the internet and that whole ecosystem. The younger consumer is now finding more value and opportunity in shopping at some of those more traditional brick and mortar retail stores that don’t have an e-comm presence.”
All systems BOPIS
Buy online, pick up in-store – known as BOPIS – and curbside pickup has become a key factor in the growth of holiday sales in recent years.
Besides being a popular option for shoppers who want to avoid lines and shipping delays, it also benefits retailers through increased store traffic and add-on sales, because customers will browse while picking up their order. According to PwC, BOPIS is especially popular among millennials and Gen Z.
“The fulfillment by the brick-and-mortar retailers of e-commerce orders continues to grow, and we’re seeing more retailers doing their e-commerce fulfillment from the physical store than we have before,” Auster said. “Our general conversations with retailers is that they are seeing more and more of a benefit of having a physical store not only service the customer that’s walking in to buy stuff but also being able to service their e-commerce solution at the same time.
“It’ll be interesting to see how much that ramps up this holiday season. Since it’s a shortened holiday season, you’ll probably have a lot of people that are going to run out of time to do their holiday shopping and they’re going to panic a little bit that they’re not going to be able to get their gifts on time if they order them online,” he said.
BOPIS is “one of the strongest areas of evolution and innovation that we’ve seen with brick and mortar retailers over the last number of years in terms of bringing that omnichannel access to the retailer together, making it as easy and convenient as possible from really designing spaces to make it easy for the customer to come and pick up,” Harding said.
The service was “a response to the emergence and growth of online shopping and retailers really wanting to be able to make a purchase as convenient as possible for the shopper,” he said. “And then retailers really ahead of the curve in terms of brick and mortar jumped in and embraced an online presence. And then they merged those two things together, in terms of shipping and taking returns back and so forth.
“Obviously COVID was a catalyst to help grow that even further. Although we certainly saw, I think, during that period of time … there was talk about how everybody shifted to shopping online and it was going to be the death of the brick-and-mortar story. But very quickly people came back out and back out to the stores and just for that experience and for all the benefits of being to touch and try on products,” Harding said.
Harding believes retailers will be able to handle whichever click-and-collect method customers choose this season. “I think the retailers are ready, especially the ones that have really embraced that and committed an investment to improving that. And it’s a story over time. Retail business has relatively rapid evolution in store design, product mix, bringing experiences into the store, buy online pickup and store omnichannel. The folks that invest in that, embrace it and do it well — it just creates more of a separation between the more successful retailers and less successful retailers,” Harding said.
While there may be much uncertainty in the air surrounding the state of the U.S. economy and impending election, consumers are looking forward to the holidays, market research firm Circana reported.
According to Circana, more Americans are viewing the season as a break from everything that’s happening in the world and say simply going out shopping puts them in the holiday spirit.
The firm also found that shoppers who say they plan on buying more gifts for others to bring them joy during challenging times (40%) and those who plan on buying more gifts for themselves as part of their own “retail-therapy” (28%) have both increased from last year, but have not yet reached 2021 levels.
In addition, this year’s household food and grocery costs will affect holiday shopping for 62% of consumers. However more consumers are feeling positive about their personal financial situation than last year (57%).
Despite the good feelings about the economy in 2024, many consumers will be price conscious. As a result, more people began holiday shopping during summer sales and plan on taking advantage of fall promotional events than they did in years past, Circana said.
Election watch
Additionally, less than one-third of shoppers say the election will affect their holiday purchasing decisions, according to Circana.
While it may be fair to think that a contentious election could negatively impact holiday spending, trade publication Chain Store Age pointed out elections historically “don’t have a measurable impact on consumer behavior long-term.”
Spending may temporarily decrease around Election Day in November, but it generally rebounds shortly thereafter. The publication also noted that 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.”
Research by The University of Chicago Booth School of Business in partnership with Princeton University on four presidential elections from 2000 to 2013 found consumer sentiment declined for those seeing their candidate lose, but that other factors – such as weather, unemployment rates and interest rates – play a bigger role in affecting spending.
According to the study, the last two contentious elections wound up delivering better-than-expected holiday seasons.
In 2016, U.S. retail sales in November and December rose 4%, topping the National Retail Federation’s expectation that year of a 3.6% gain. Then in 2020, sales grew 8.3% during the holiday season, beating NRF’s forecast of a range of between 3.6% and 5.2%.
Auster said, “With the election coming up and Thanksgiving being later, I could appreciate how retailers might not be sure what consumer sentiment is going to look like on the other site of the election … I’m sure they’re watching very closely to see what consumer sentiment is not just after the election but leading up to it.
“What really will impact holiday promotions is what level of inventory they still have in their stores as they get closer to the actual holidays themselves,” he continued. “And that’s where the shortened timeframe comes into play … If there’s just less time to go shopping between then and when the holiday happens, retailers get concerned that not enough of their inventory is being sold through during that holiday season, they might end up offering promotions just to make sure that the inventory that they order for the holidays they’re able to sell.”