It's the most enchanting and bustling season of the year. According to eMarketer's projections, total retail spending is expected to rise by 4.5%, reaching $1.3 trillion during the 2023 holiday season. E-commerce is set to contribute nearly 20% of these sales, accounting for a significant 48.5% of incremental spending growth.
So, how can Shopify merchants make a memorable mark this holiday season? SANOMADS is here to unveil the latest forecasts, strategies, and expert insights, helping you maximize your performance during this festive shopping season. Explore these early consumer shopping trends to get ready for what will be influencing shoppers in 2023.
Holiday Shopping Season Is Commencing Earlier Than Ever Before
Last year, in 2022, demonstrated that holiday shopping is no longer confined to just November and December. Numerous prominent retailers initiated their Black Friday and Cyber Monday promotions as early as October and continued to offer holiday sales and promotions throughout the entirety of Q4.
In a survey conducted by Google, it was revealed that "as of mid-October, holiday shoppers worldwide had already completed an average of 21% of their holiday shopping." Not only are retailers and shoppers following a similar pattern this year, but early holiday shopping is becoming the new standard.
Thanks to autumn promotions like Amazon's Prime Early Access Sale, October witnessed a 9.8% growth rate in e-commerce in 2022, surpassing the rates of November and December. Events such as "Black Friday in July" further affirm that consumers are shifting their holiday spending earlier and expect retailers to accommodate this trend.
Retailers should be well-prepared to seize attention early and embrace an "always on" marketing approach. As Rob Rosenthal, Chief Revenue Officer at Bloomreach, aptly puts it, "When I think about planning for the holiday season, it's all about conducting tests up to a year in advance. Why wait until just six months before? It's essential to prepare a year ahead – there's no reason not to be fully ready anymore."
Gen Z Seeks Authenticity
Authenticity and purpose will emerge as pivotal elements in Gen Z's holiday marketing strategy. Gen Z is rapidly establishing itself as a significant force in the realm of holiday shopping, making it a demographic worth your focused attention.
Why is this demographic gaining such prominence? Here are some compelling reasons:
1. Sizeable Population: Generation Z comprises over 68 million individuals, making it a substantial consumer base.
2. Resilience to Inflation: Zoomers, as they're often called, appear to be less impacted by inflation trends, which is an important factor in today's economic landscape.
3. Holiday Enthusiasm: A striking 72% of Gen Zers express their anticipation for holiday shopping.
4. Diversity and Scepticism Towards Marketing: This generation is the most diverse in history and tends to be less influenced by slick marketing tactics. To effectively connect with this dynamic and diverse group of holiday shoppers, authenticity and diversity must take center stage.
Every generation values relevance and authenticity, but Gen Z possesses the technical know-how to recognize how marketers deliver these qualities online. They are willing to accept certain trade-offs in exchange for a more down-to-earth and relevant marketing experience. Notably, Gen Zers are three times more likely than older generations to accept tracking prompts like Apple's App Tracking Transparency. They are also less inclined to clear their browser cookies or employ ad-blocking technology.
In return for allowing online tracking, the youngest adult generation expects marketing that is refreshingly honest and straightforward. Nishat Mehta, President of IRI Media Center of Excellence, points out that Gen Z values honesty and straightforwardness more than any generation since their grandparents and great-grandparents, the Silent Generation.
While Gen Z continues to respond positively to influencers (with 75% having made a purchase based on an influencer's recommendation), relevance is crucial. Younger buyers are more likely to resonate with micro-influencers who lead lifestyles similar to their own rather than high-profile celebrities.
Marketers play a direct role in establishing their brand's authenticity. A substantial 75% of Gen Zers expect brands to respond to feedback as they view this as a marker of authenticity.
Numerous studies, including one from Creatopy, affirm Gen Z's desire for brands to take a stance on social issues. Considering that Gen Z is the most diverse generation in history, it's evident that diversity and inclusivity are high on their list of expectations from brands.
Pew Research data reinforces this viewpoint, showing that more than other generations, Gen Zers view racial and ethnic diversity as a net positive for society, although Millennials also share similar sentiments. This highlights the importance of aligning with these values in holiday marketing efforts to resonate with Gen Z consumers.
Discounts Need To Be Leveraged
While the holiday season traditionally ushers in a spirit of generosity, current data reveals that many shoppers are adopting a more budget-conscious approach.
Even though inflation has seen a decline in comparison to the previous year, CNBC's Supply Chain Survey indicates that a significant 71% of retailers are bracing for consumers tightening their purse strings in response to inflation.
Additionally, 43% of retailers are strategically cutting back on their inventory orders, likely prompted by Wall Street's anticipation of a possible U.S. recession within the next 12 months. This economic uncertainty looms on the horizon, possibly commencing as early as November, right as the holiday shopping season kicks off.
So, what does this economic backdrop mean for retailers in the upcoming holiday season? The resounding answer is discounts—retailers are gearing up to offer a plethora of enticing deals.
Given the prevailing atmosphere of financial uncertainty, holiday shoppers are actively seeking opportunities to make their spending more cost-effective. In fact, a substantial 67% of retailers are gearing up for a wave of consumers who prioritize discounts during this holiday season. While this approach may entail some sacrifice in terms of profit margins, offering discounts has now become an indispensable strategy for meeting the ever-evolving needs of customers in these uncertain times.
Holiday Shopping Gets More Social
In 2023, shoppers are shifting their search for the perfect gift to social media platforms. And as they get more socially savvy, they’ll want higher-quality content and smoother buying experiences.
This makes having a social media strategy extremely crucial. Just about any data you find on the topic will show that more people are looking to the likes of Facebook and Instagram for purchase inspiration and information.
In Q1 of 2023, traffic referrals from social channels were up 27% year-over-year (source). In our survey, three out of every four shoppers said they plan to use social media to learn about products.
Regardless of your primary focus on brick-and-mortar retail, establishing a robust social media presence is advantageous. Data from Salesforce underscores this point, revealing that "in the last three months, over half of consumers have visited a physical store to view or purchase items they stumbled upon through their social media feeds."
The significance of social media marketing this year cannot be overstated. According to the same Salesforce report, social media advertising is anticipated to drive ten times more online store visits during the holiday season compared to traditional marketing.
Make Customer Loyalty a Priority with Simple Returns
The holiday season offers businesses the chance to grow their consumer base and foster loyalty among their current clientele. However, creating a memorable post-purchase trip is the key to keeping these valuable consumers. For many, this means offering a simple and efficient return process.
It should come as no surprise that the holiday season's increased sales frequently result in more returns. Every week from November through mid-January, at least 10% of online orders in the United States—and occasionally as much as 16%—were returned.
Even while a high return rate might not seem ideal, this is a great chance to show your clients that you value them beyond simply their money. According to a FedEx survey, 56% of consumers are prepared to pay extra for hassle-free returns, and 98% of customers would buy from a company again if it offered quick and efficient returns.
Make sure you provide a sizable return window and an easy return experience rather than concentrating all of your work on the buying experience.
While the precise course of this holiday season remains to be seen, our top recommendation is to keep your customer at the forefront of your e-commerce strategy. Prioritizing your customers by providing special offers and discounts and elevating their omnichannel experience is the fundamental approach to making a remarkable impact this holiday season.