Some unique twists will confront retail as the year ends, with Boston Consulting Group’s 2024 Holiday Outlook Survey suggesting that the consumer approach to the season is mixed.
BCG anticipates modest holiday spending growth as real consumption has continued to grow in the post-pandemic era, and American household incomes and balance sheets are strong relative to historical levels. Not only that, but job growth and income growth are at similar levels to the pre-pandemic economy.
Still, balancing the positive indicators of economic growth, consumer sentiment has fallen over the past two years. Ongoing geopolitical tensions, global military conflicts and the upcoming 2024 presidential election are creating an environment that has split the attention of U.S. consumers. Then, high inflation, even with its recent cooling, has led to peak prices for consumer staples, tightening budgets for holiday shopping and making for more intentional channel selection and deal seeking. Consumers who feel a degree of uncertainty but are financially stable may choose to play it safe this holiday season, spending as much as, or modestly more than, they did last year, BCG maintained.
The calendar plays into holiday expectations as well as the economy. In 2023, consumers completed more than half of their holiday shopping before Thanksgiving. The peak holiday period, after Cyber Monday through Christmas Eve, was still the busiest among the five designated by BCG with 36% of shopping conducted. In contrast, Thanksgiving through Cyber Monday saw 7% of holiday shopping. The second business period, with 29% of seasonal spending completed, was October 1 to 31.
In 2024, the prime holiday season is only 27 days between Thanksgiving and Christmas, five fewer shopping days than was the case last year. Hanukkah also is later than it was in 2023.
The U.S. presidential election is in November and already affects the supply and prices for the best media spots, so getting consumers’ attention will be more difficult in 2024. As for the outcome, partisans on the winning side will likely have an improved sense of confidence, while those on the losing side may be less inclined to celebrate.
Weekday shopping has decelerated since the pandemic, and even as e-commerce has continued to grow, BCG noted, adding that the prominence of online channels is 1.4 times higher on weekdays. With online shopping comprising 40% of weekday shopping, it is quickly approaching the status of primary channel for consumers making Monday through Friday purchases. As such, achieving holiday season growth targets in 2024 and beyond will rely more on weekday success online versus in-store.
As part of retail prospects, what BCG characterizes as disruptor channels have won a foothold over the past two years. Although still small, social media commerce and online marketplaces specializing in deals and gamification, such as Temu and Shein, are becoming increasingly formidable players, BCG asserts. Then, direct, social media and certain emerging marketplace channels are experiencing strength early in the holiday shopping season. In some cases, e-shoppers seeking the just right gift prefer to buy directly from brands. Later in the season, shoppers will likely prefer predictable fulfillment and competitive prices that mega-retailers and platforms provide.
