What Retailers Should Plan For This Holiday Season
Oct 31, 2024
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Sucharita Kodali, a VP and Principal Analyst at Forrester, and Emily Collins, a VP and Research Director at Forrester, delve into holiday spending trends in this insightful discussion. They highlight how consumer sentiment is impacted by economic realities, particularly the psychological effects of inflation. The duo shares strategies for retailers, focusing on the importance of loyalty programs, selective discounting, and innovative marketing. They also explore the challenges posed by political influences and societal divides on consumer spending behavior this holiday season.
Retailers should be aware of the compressed holiday shopping schedule and adjust their promotional strategies to maximize consumer engagement.
Consumer sentiment remains fragile despite strong economic indicators, leading to expectations of reduced holiday spending amidst inflation concerns.
Deep dives
Preparing for a Compressed Holiday Shopping Season
This year’s holiday shopping season is expected to be particularly challenging for retailers due to the late timing of Thanksgiving, which falls on November 28th, and the potential distraction of election-related marketing. This compressed schedule implies that traditional sales events such as Black Friday and Cyber Monday will occur closer to Christmas, resulting in a shorter shopping window for consumers. As a result, many customers indicate a willingness to spend less this year, reflecting a cautious approach toward holiday spending amidst uncertain economic conditions. Retail research forecasts e-commerce growth in the high single digits and overall retail growth at notably low single digits, signaling subdued consumer confidence heading into the season.
Despite strong economic indicators such as rising wages and low unemployment, consumer sentiment remains fragile, leading many to anticipate reduced holiday spending. This phenomenon, often referred to as the 'vibe session', highlights a disconnect between economic data and consumer emotions, driven by concerns over inflation and political polarization regarding economic performance. Consumers, scarred by previous inflationary pressures, express reluctance to increase their holiday budgets, with many expecting to spend less than in past years. Even though retail spending has reached record highs in recent months, the growth rate is still lagging behind inflation, signaling that consumers are becoming more pragmatic in their purchasing behaviors.
The Evolution of Shopping Events and Promotions
Shifts in consumer shopping behavior are expected this holiday season, with a significant number of shoppers indicating their intent to participate in online shopping on key dates like Cyber Monday. The rise of omnichannel strategies, including curbside pickup and in-person shopping, underscores the need for retailers to adapt their promotional tactics to attract and engage customers. Retailers are increasingly focusing on loyalty programs to deliver personalized discounts and exclusives to shoppers, enhancing customer experience while maintaining profit margins. Additionally, the trend of event-driven marketing in retail continues to proliferate, prompting brands to create tailored sales events that leverage emotional connections rather than just discounts.
The holiday season is here. How do consumers feel about spending? This week on What It Means, VP and Principal Analyst Sucharita Kodali and VP and Research Director Emily Collins dive into Forrester’s latest research on holiday spending trends and share advice for retailers.
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