With the 2023 holiday season responsible for a large percentage of annual retail profits, brands are looking for new ways to give themselves an edge over competitors. It’s also the time of year when demand—and expectations—for a seamless customer experience skyrockets. How can you prepare your organization for success? Let’s unwrap the latest trends, predictions, and forecasts for holiday retail spending this year.
The Forecast: Insider Intelligence/eMarketer reports retail spending will increase by 4.5% in November and December, with ecommerce sales increasing by 11.3%. This EOY growth would be the sixth-fastest rate in the past 15 years!
Boosting ecommerce sales for retailers means you’ll need to embrace consumer sentiment and understand shoppers are trying to do more with less. You’ll also need to be prepared earlier than usual to ensure you don’t lose sales to competitors.
Consumers with discount-driven shopping behaviors are creating demand for retailers to bring mega sales event promotions and inventory reserved for the fourth quarter as early as October. Aggressive discounts and 25% of holiday sales will happen during the Cyber Week 7-day sales period. With an earlier start to the holiday shopping season, brands must be ready to serve customers’ in-store and online shopping needs.
Retail industry leaders are deploying new ways to use AI to drive sales, creating more relevant and convenient offers for each shopper. Generative AI and predictive AI will influence $194 billion in global online holiday shopping sales as consumers engage with marketing and service experiences.
The Honeywell AI in Retail survey found 6 in 10 retailers plan to adopt AI in the next year, and the top three reasons for deploying AI technologies are:
Achieving cost efficiencies (44%)
Generative AI is expected to significantly influence holiday season shoppers. Retailers can anticipate AI providing tailored experiences, improving operational efficiency, simplifying inventory management, and thwarting fraud, all of which enhance customer satisfaction and boost sales and profits:
Personalized customer service, marketing promotions, and AI-powered commerce experiences will drive $194 billion of that spending.
Salesforce Research finds that 88% of retailers plan to make their return policies stricter before the holidays, which may present a risk. Those who rein in their return policies could see a slower holiday start. Since 81% of shoppers report they’ve stopped purchasing from a brand/retailer after one bad return experience, returns dramatically impact initial sales. For 2023, Salesforce predicts that poor return experiences, policies, and processes mean 21% of online orders will be at risk of being lost.
“Brands that activate customer data and insights to execute effective promotions, relevant engagements powered by AI, and seamless experiences across channels will keep shoppers returning over the holidays,” says Rob Garf, VP & GM of Salesforce Retail.
Buy Online Pick-Up In Store (BOPIS) fueled 2020 growth and will continue to play an important part in the 2023 holiday shopping experience. Last year, BOPIS was responsible for 1 in 5 online orders and 1 in 3 orders after the shipping cut-off dates. BOPIS is a wise investment for any retailer as it will likely drive $28 billion in incremental global store sales.
To execute BOPIS well, brands should invest in training employees with the right tools. Salesforce reports businesses that offered BOPIS grew their online revenue 7x faster than brick-and-mortar stores that don’t provide it.
“Shoppers using BOPIS often prioritize convenience, which might seem counterintuitive, along with faster delivery. However, not all retailers or order sizes qualify for same-day delivery. A solid and consistent experience fosters shopping habits, such as going to the same grocery store because of its efficiency in getting in and out ,” says Simion Petrov, SVP of Innovation and Industries at OSF Digital. “Some shoppers who use BOPIS vs. home delivery are looking to save money on shipping costs to take advantage of lower product prices. To appeal to this group, brands can offer exclusive, BOPIS-only discounts.”
Insider Intelligence/eMarketer reports social media advertising will drive 10x more online shopping visits this holiday season than traditional marketing.
Q1 2023 traffic referrals from social media platforms grew 27% YOY. Social media’s influence is affecting in-store sales, too. A recent shift in social media is the decline in influencer effectiveness and the increase in social ad impact.
Salesforce Research found in the past three months, more than half of consumers reported going to a physical store to see or buy products they discovered on their social feeds. Half of shoppers are more likely to visit a retailer’s website after seeing a social media ad, compared to 39% of shoppers who receive a promotional email.
The Conclusion? If you haven’t already, now is the time to optimize your holiday sales strategy. By taking the time to understand your customers and find data-driven insights to create personalized experiences, you can improve your customer retention this holiday season and beyond.
Becky’s background in corporate marketing, sales and leadership spans several industries including Media and Communications, Retail and Consumer Goods, Professional Services, Finance and Technology. With more than 15 years of worldwide experience in rapidly growing organizations, Becky plays a major role in integrating technologies and business processes to create demand engines that influence and convert growth. Becky’s passion for technology and B2B enterprise services inspire her to share unique perspectives on digital transformation strategies that deliver strong results and deep business intelligence.