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The forecast for retailers this holiday season is bright. Even amid rising costs and inflation, consumers are expected to spend more than last year. Savvy shoppers are finding their gift inspiration in person and on new digital platforms.
Forward-looking retailers can capitalize on the busy season by making it easy for customers to shop how they want with omnichannel, mobile commerce, and buy-now, pay-later (BNPL) options. Plus, retailers are anticipating being able to meet consumer demand with the help of AI and technology solutions.
Based on data from the Square and Afterpay Festive Forecast, these are top trends among consumers and retailers that will shape the 2023 holiday shopping season.
Consumers are ready to spend this holiday season.
Despite a year of economic uncertainty, consumers report having a positive outlook on the upcoming holiday season. In fact, 34% of consumers say they plan on spending more than previous years. Across all generations, 58% of Americans are positive they will achieve the financial goals they set for themselves this year, indicating a more generous gift-giving season in the forecast.
In response to anticipated consumer demand, businesses are strategically gearing up to capitalize on sales. Retailers are preparing to service the influx of customers by tapping into technology such as mobile commerce and AI-enabled tools. Similarly, 71% of Square sellers report expecting sales to increase compared to last year. With forecasted demand looking strong, 72% of retailers do not plan to shift their discounting strategy drastically — they intend to offer an average discount of only 15%.
Across all generations, 58% of Americans are positive they will achieve the financial goals they set for themselves this year, indicating a more generous gift-giving season in the forecast.
Social media and compelling content are inspiring shoppers.
The bulk of holiday shoppers plan to finish their shopping by November, with many waiting to capitalize on Black Friday and Cyber Monday deals. Retailers should account for this seasonal demand when planning their inventory and holiday promotional strategy.
To no surprise, consumers are still looking to social media for holiday gift-giving inspiration, and as a result, Square reports 78% of sellers are planning to promote their holiday products on social channels. Outside of social media, emerging digital channels are becoming a source of inspiration for shoppers, with 31% of consumers looking to shopping apps, 23% to websites and blogs/forums, and 22% to wishlist apps or websites. Creating compelling content, either in partnership with influencers or independently, can be an effective way to reach your target audience on these platforms.
Retailers are unlocking revenue with omnichannel and multihyphenate selling.
Consumers are shopping in person as well as online. Square reports that 49% of shoppers get gift ideas through word-of-mouth and 39% find inspiration in stores.
Omnichannel commerce continues to be a driving force for holiday sales, especially since nearly half of consumers plan to buy in-store gifts this season.
To drive traffic in-store, offer unique experiences and exclusive in-store only offers. ifty-one percent of Square sellers plan to host a curated holiday event, and 36% will offer exclusive merchandise, while 18% will partner with another business to offer discounts or product bundles to increase sales and diversify their revenue streams.
You can also make your customers’ shopping experience as convenient as possible this year by offering a buy online, pick up in-store (BOPIS) option, which 31% of Square sellers are already considering.
Most interestingly, there’s a growing number of multihyphenate retailers on the rise, with 9% of American retailers self-identifying as mixed-use as they seek to alleviate risk and maximize revenue potential this holiday season.
AI and technology are helping both shoppers and retailers this season.
Shoppers have a secret helper this holiday season — AI. Specifically, Square reports that 24% of consumers have used a virtual assistant to help with shopping over the past 12 months. To no surprise, Gen Zers(36%) and millennials (35%) are adopting AI at faster rates, leveraging it for product information and finding the best deals.
Businesses are also reporting that they lean into technology to tackle inventory management (29%) and marketing (54%). Specifically, 23% of Square sellers plan to use AI-enabled tools to operate and scale more efficiently.
As prices continue to increase, buy now Pay Later gains popularity.
Even though consumers are ready to shop this holiday season, they’re still feeling the effects of inflation. Square reports that 77% of Americans find it harder to save with the prices of products increasing. As a result, consumers are actively looking for solutions to help them save, including shopping for cheaper alternatives and using flexible payments like buy now, pay later (BNPL). Currently, 21% would consider using a BNPL option to make their holiday shopping budget go further.
In response, one in five businesses plans on offering buy-now, pay-later options to accommodate customers looking for a flexible payment option at checkout this year. Additionally, 21% will offer payment links to streamline checkout. Some are even looking to automate the checkout process, with 6% offering self-checkout kiosks.
Currently, 21% would consider using a BNPL option to make their holiday shopping budget go further.
In order to maximize holiday sales and get the word out about your holiday assortment and deals, start marketing early using social media and shopping and wishlist apps. Prioritize omnichannel selling, mobile commerce, and BNPL options in order to meet your customers where they want to shop and to get a leg up on the competition. Finally, lean on AI and technology solutions, like Square for Retail, to streamline operations.
For more 2023 holiday shopping trends and data, read the full Square and Afterpay Festive Forecast report.