Retailers should be more optimistic about the upcoming holiday season.
Holiday shopping season is almost upon us.
With uncertainty swirling around the state of the U.S. economy and the looming election, many are questioning whether sales in 2024 will be as strong as in past years.
Americans are generally pessimistic about the economy, even though inflation is falling and consumer spending remains strong. Economist Paul Krugman explored this disconnect in a New York Times article, noting that “the most widely cited explanations for the negative perception of the economy are at odds with observations that go beyond consumer sentiment” and that “the only hypotheses that seem to hold across the board have to do with the stories people see and hear, not with their own experiences.”
Some retailers are echoing this negative sentiment: A recent CommerceNext survey by Forrester, for example, found that 80% of retailers believe consumers will spend less on gifts and holiday items this year.
Nonetheless, I think there’s reason to believe this year’s holiday shopping season won’t be much different than previous years — in fact, if Amazon’s record-breaking Prime Day 2024 numbers are any indication of consumer purchasing intent, holiday sales could reach an all-time high.
The fact is, retailers always face challenges during strong sales periods, including supply chain disruptions, upcoming elections, and other factors. Retailers need to prepare their command centers early and be able to adapt to changing circumstances, not just this year but every year. For most retailers, holiday inventory is on order and in transit.
Let’s reveal three predictions for the upcoming holiday shopping season, including how retailers can prepare.
Retailers will experience a large number of orders in a short period of time.
This year, retailers are dealing with a shortened shopping season, with just 27 days between Thanksgiving and Christmas (fun fact: Cyber Monday is on December 2nd). That means retailers are receiving a large number of orders in a short period of time, which can create logistical challenges, including inventory management, shipping stoppages, and temporary staffing.
To overcome these obstacles, it’s important to be proactive and adaptable. By now, retailers should have solidified their merchandise buying and allocation strategies, as well as strategies for hiring temporary support workers for stores, distribution centers, and call centers. Shorter lead times mean less time to execute training and hiring cycles, so starting early is paramount.
Moreover, retailers are already 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 drive sales during this short selling period.
The impending election is unlikely to have a significant or lasting impact on holiday sales.
While it’s reasonable to assume that a contentious election would have a negative impact on holiday spending, research has found that elections don’t have a measurable effect on consumer behavior in the long term — in fact, holiday spending reached a five-year high after the 2016 election.
While spending may temporarily dip during election years, it usually bounces back quickly afterward, and both of the current presidential candidates have previously held public office, giving further reason to believe the election will have little effect on holiday shopping.
That being said, retailers always need the ability to pivot quickly, as various factors (such as elections) can temporarily affect consumer behavior. Retailers can pivot by implementing tools that allow them to change their websites, promotional strategies, variable marketing costs, and more, in a single day.
In today’s dynamic world, adjusting sales strategies every week is no longer enough, especially in unpredictable situations. That’s why retailers need tools that allow end users to make quick changes to their websites, and flexible marketing tools that allow for multiple adjustments throughout the day.
Promotions (some of which are AI-driven) will take advantage
Consumers will be looking for deals this holiday season due to the overall bleak economic outlook, but they will still buy. Therefore, retailers need to create strong promotional strategies that help them increase average order value, acquire new customers, and capture as much revenue as possible from existing customers. This is key to a successful selling season.
Retailers are increasingly turning to AI-powered solutions to create and drive promotions (and pricing) that are highly personalized and resonate with more customers. Most consumers can attest to the effectiveness of today’s expertly targeted promotions. Scrolling through Instagram or Gmail often brings with it the temptation to make a purchase. Thank goodness for AI.
AI-driven tools can also be extremely helpful in executing these promotions efficiently and in a timely manner. AI can significantly improve buying and allocation cycles so retailers don’t lose profits by shipping items multiple times to meet demand. These innovations will soon become core to retail operations, if not already essential.
While it’s unclear exactly how this year’s holiday shopping season will unfold, sales will likely remain consistent. No matter what year it is, retailers always face new circumstances and challenges. The only way retailers can stay ahead in today’s ever-changing marketplace is by adopting tools and strategies that allow them to take an agile, proactive approach to sales year-round.
