3 ways retailers can quickly build supply chain resilience for the holiday surge
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Experts say consumers will be in the holiday spirit this season, opening their wallets and driving retail sales up from last year, but there are a lot of factors that could impact that rosy outlook.
The National Retail Federation expects 2024 holiday sales to increase between 2.5% and 3.5% over 2023, driven by strong online sales. In November and December, shoppers will spend between $979.5 and $989 billion, up from $955.6 billion in that time period last year.
That growth, however is down from last year, when sales jumped 3.9% from the previous year. Deloitte issued a similar forecast, predicting a moderate 2.3% and 3.3% increase in retail sales in 2024.
Consumers will spend, on average, $902 on gifts, food, decorations and other holiday items—a record amount, according to NRF.
The upbeat forecasts, though, are tempered by a lot of unknowns. Inflation-scarred consumers, fewer days between Thanksgiving and Christmas, hurricanes, and an election all could factor into 2024 holiday spending trends.
Cautious holiday spending in 2024: Budget shoppers lead the way
While inflation has cooled some and there are reports of job growth, consumers still pay high costs for staples and remain in belt-tightening mode. They’ll be looking for deals and discounts this holiday season.
“Feeling uncertain but financially stable, households may choose to play it safe this holiday season but still spend as much as, or modestly more than, they did last year,” Boston Consulting Group said in its holiday outlook.
Geopolitical conflicts and the upcoming presidential election are splitting consumer attention in the US, BCG noted, although it also said it doesn’t expect the election to reduce spending no matter the outcome.
Income level plays a big role in how much consumers plan to spend this holiday season. According to PwC, 34% of consumers earning more than $65K per year plan to spend more compared to just 21% of those making less than $65K.
More than half of consumers (57%) said their finances are strained, leaving little money left for the holidays or extras, PwC said.
However, Deloitte found that consumers across income levels embrace a thrifty mindset:
- 62% plan to trade down to lower-priced brands
- 45% plan to switch to more affordable retailers
- 75% plan to shop promotional events (up from 61% in 2023)
- 40% will seek out private labels
Impact of a shortened 2024 holiday shopping season
This holiday shopping season is already atypical with Thanksgiving falling late, leaving five fewer peak shopping days—a fact many consumers may not be aware of.
That could make for some volatility, encourage retailers to start more promotions before Black Friday, and push more shopping into December, particularly online shopping, according to Mastercard’s outlook. It also could increase demand for fast delivery.
Seventy-eight percent of retailers surveyed by Deloitte said the increase of promotional events in October is pushing holiday sales forward.
More shoppers planned to get an early start in 2024, with nearly half planning to shop before November, according to the NRF survey. Still, most consumers (62%) expect to wrap up their holiday shopping in December.
Weather events could have impacted those plans, though, especially in areas torn apart by hurricanes. People rebuilding their homes in North Carolina and Florida have other spending priorities.
2024 Holiday shopping trends: The Gen Z effect
The 2024 holiday season will reflect growing consumer preference for e-commerce. NRF’s research found that online remains the top shopping destination with more than half of survey respondents (57%) saying they plan to use digital channels for their holiday purchases. Other hot spots for shopping:
- Department stores (46%)
- Grocery stores and supermarkets (46%)
- Discount stores (45%)
NRF expects online and other non-store 2024 holiday sales will grow between 8% and 9%, totaling $295.1 billion and $297.9 billion.
Gen Z drives holiday spending growth despite frugality
Recommerce also will see a surge of holiday shoppers, driven by young consumers between the ages of 18 and 24, NRF said.
“Secondhand and refurbished gifts appeal to this age group’s desire to save money and be more sustainable,” said Phil Rist, executive VP at Prosper Insights & Analytics, which conducted the survey for NRF.
Gen Z will be the star of 2024 holiday spending, according to PwC. While millennials drive overall spending, Gen Z is outpacing other generations with 35% planning to increase their holiday budgets this year, analysts said.
They prefer digital shopping, which is influencing in-store retail, PwC said. Seventy-two percent of Gen Zers prize self-checkout when holiday shopping in stores, 70% say mobile payments are important, and 68% like brand apps. Forty percent also cited the importance of celebrity and influencer endorsements.
Across generations, consumers will be spending more on experiences like holiday events while gift spending remains flat, Deloitte expects. They’re also spending less on themselves this holiday season with only 32% planning to buy stuff for themselves, down from 48% last year. Gen Zers, however, are more likely to self-gift with 47% planning to treat themselves.
