Value-seeking consumers trading down, strategically waiting for discounts and choosing low-cost Chinese shopping apps will soften holiday sales growth to 2% year over year (YoY) both in the U.S. and globally, according to the Salesforce Shopping Index, which analyzes data from more than 1.5 billion global consumers on retail sites.
While holiday sales grew 3% YoY in 2023, reaching $1.17 trillion, Salesforce predicts global sales for November through December 2024 will reach $1.19 trillion, with the U.S. contributing $277 billion. This soft projection is reaffirmed by Salesforce consumer surveys indicating that although 47% of shoppers say they will buy the same amount as they did in 2023, 40% plan to spend less this year.
“The global economy is still full of risk, although inflation has leveled off,” said Rob Garf, VP and General Manager of Consumer Goods at Salesforce at a briefing earlier this week. “Interest rates are still higher and global conflicts are still snarling supply chains, and we see shoppers offloading inflation onto debt.”
In fact, a Salesforce survey conducted earlier this month revealed that 37% of consumers say they are using credit cards more than they did last year; 32% are using buy now, pay later (BNPL); and 43% are carrying more monthly debt.
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Chinese Shopping Apps’ Market Share Increasing
Value-seeking consumers are choosing deep-discount Chinese shopping apps like Temu, Shein and, increasingly, TikTok. Nearly two-thirds (63%) of consumers surveyed by Salesforce in August 2024 have made a purchase through these apps over the past six months, and 50% plan to purchase from them during the holiday season. These figures are even higher among Gen Z and millennial consumers: 80% have purchased from these apps over the past six months, and nearly 70% plan to use them for holiday purchases. Overall, Salesforce predicted that Chinese shopping apps will account for just over one in five (21%) purchases this holiday season.
“Temu and Shein are the top two [among Chinese apps], but TikTok is up 24% since April and is now the third-most-popular app,” said Caila Schwartz, Director of Consumer Insights and Strategy at Salesforce during the briefing. Consumers cite value as their top reason for using these apps, at 58%, far outstripping the second-most-popular reason, fast shipping, at 28%.
Consumers Plan to Wait for Cyber Week Discounts
Shoppers also plan to trim their budgets by holding out for discounts they expect will kick in during Cyber Week, the period around Thanksgiving that includes Black Friday and Cyber Monday. “We saw in 2023 that price-conscious consumers waited until Cyber Week to make purchases, and we anticipate this trend continuing this year even more aggressively,” said Schwartz. She cited Salesforce data showing that 67% of shoppers are waiting until Cyber Week to make “splurge” purchases.
Salesforce is predicting that global discount rates will rise briefly in October, likely around the dates of the fall version of Amazon Prime Day when many retailers run promotions in hopes of catching the holiday’s halo effect. Salesforce forecasted that discount rates will peak at an average of 28% globally during Cyber Week, with the average U.S. discount forecasted to reach 30%.
Shorter Season Puts BOPIS in the Spotlight
Garf and Schwartz noted that this year there are just 27 days between Thanksgiving, which falls on Nov. 28, and Christmas Day, a factor that will provide a key advantage to retailers with effective buy online, pick up in-store (BOPIS) offerings. Salesforce forecasted that BOPIS will account for a full one-third (33%) of global online orders for the week before Christmas and Boxing Week this year due to the shortened season. The higher volumes and shorter time frames will undoubtedly increase the pressure on retailers to get BOPIS right, since the reputational cost of disappointing a customer that has made a special trip to a store is one retailers don’t want to pay.
“Retailers will extend the life of their digital shopping season if they use BOPIS, but the winners will be the ones that can actually execute it,” said Garf. “Store associates are feeling overstretched, particularly during the holidays, and many retailers have pulled back [their BOPIS] offerings, saying it’s creating too much anxiety among associates and customers.”
Holiday Advice: Focus First on Customer Acquisition
Retailers seeking their share of what could be a smaller holiday “pie” also should focus on customer acquisition — and the sooner the better. Advertising costs and space availability will both be at a premium with the 2024 elections in the U.S. (and many more around the world), which will make it tougher for brands to get their messages heard by consumers.
“Online traffic is cheaper now than it’s going to be in a few months, when many politicians will be buying ads,” said David Oksman, VP of Marketing and DTC at Samsonite, who joined Garf and Schwartz at the briefing. “Acquisition costs will go up even more than we’ve seen in the past.”
That’s why Oksman recommended some tried-and-true tactics to drive acquisition and boost customer data-gathering: “Fall is a great time for sweepstakes and giveaways,” he said. “The old playbooks still work, and that [customer] acquisition is gold.” A sweepstakes prize such as a shopping spree, or even simply offering exclusive early access to products or deals, can be a strong enough incentive to get consumers to share their email address with a brand.
“Loyalty programs are another strong value play in the consumer’s mind,” said Schwartz. “Even if you’re not offering points, benefits like free returns or shipping” can encourage shoppers to sign up.
