As the leaves begin to change and the air turns crisp in early October, a familiar yet somewhat jarring sight greets shoppers in retail stores: holiday gifts, decorations, and sales promotions. This early onset of the holiday shopping season isn’t merely a figment of your imagination; it is a strategic response to various market dynamics and consumer behaviors that are shaping the retail landscape.
The backdrop to this phenomenon is a notably compressed shopping window between Thanksgiving and Christmas, which will consist of just 27 days this year. This limited timeframe has led retailers to extend the holiday shopping season, a trend aptly termed “holiday creep.” According to Capgemini, major players like Target, Walmart, and Amazon have begun rolling out holiday promotions as early as October in recent years, successfully driving sales and improving profit margins while navigating supply chain challenges.
Deloitte’s recent holiday retail forecast anticipates that holiday sales will increase moderately by 2.3 to 3.3 percent in 2024, bringing total retail and consumer product sales to a staggering $1.58 trillion to $1.59 trillion from November 2024 through January 2025. However, this optimistic outlook is tempered by the realities of consumer behavior. Ted Rossman, a senior analyst at Bankrate.com, notes a significant shift toward frugality among shoppers. “There is a frugal bent to the shopper right now,” he explains. “Those who are buying are experiencing deep discounts, and I think it’s going to be another big year for bargains, especially with high inventory levels and tight consumer budgets.”
The impact of external events, such as the upcoming national elections, is another layer influencing consumer spending. George Mason University professor Mehmet Altug points out that election distractions could push retailers to ramp up promotions even earlier than usual. While the elections may divert consumer attention away from shopping, they could also lead to a surge in early holiday marketing campaigns. “Retailers could lose a few days or weeks due to the elections, so they might start pushing promotions even days earlier,” he observes, although he remains skeptical about any substantial change in overall spending patterns.
The shift towards online shopping continues to gain momentum, further complicating the retail landscape. A report from Experian underscores this trend, noting that mobile orders during Black Friday in 2023 represented over 50 percent of all sales made on smartphones. As more consumers gravitate toward e-commerce, retailers are gearing up for a digital-first approach, with marketing strategies being set in motion as early as summer. Rossman highlights this shift, stating, “Shoppers in-person tend to make more impulse buys, but with half of holiday shoppers starting to buy before October, it’s almost like Black Friday starts in October now.” The rise of Amazon’s “Prime Days” scheduled for October 8 and 9 exemplifies this shift toward early holiday sales.
Despite the anticipated surge in online shopping, potential economic headwinds pose challenges to retailers. Akrur Barua, an economist with Deloitte Insights, notes, “Inflation is both a headwind and tailwind to holiday sales. While declining inflation boosts purchasing power, it also dampens the nominal rise in sales value.” Additionally, rising credit card debt and the depletion of pandemic-era savings could weigh heavily on consumer spending this holiday season.
Interestingly, one trend that has emerged amidst tightening budgets is the inclination for self-gifting. A survey conducted by Holiday Retail TrendWatch reveals that 41 percent of consumers plan to buy gifts for themselves this holiday season, with this behavior most pronounced among Generation Z and millennials. These demographics, highly attuned to their desires and needs, are not hesitating to treat themselves even as they budget more carefully.
Yet, the retail sector must also grapple with the daunting challenge of returns, which reached an alarming rate of 15.4 percent of all holiday sales last year, according to the National Retail Federation. Altug warns that a longer shopping season may exacerbate this issue, as consumers will have more time to reconsider their purchases and return items. “With the extended length of time, you have more opportunities to change your opinion on a purchase,” he explains. This trend could significantly impact retailers’ bottom lines, as higher return rates can erode profit margins.
In summary, the holiday shopping season is evolving in response to a blend of consumer behavior, economic conditions, and external events. As retailers adapt to these changes, consumers too are navigating this new landscape with a more thoughtful approach, blending frugality with a desire for early holiday cheer. Whether this season will ultimately yield the expected boost in sales or be tempered by economic realities remains to be seen, but one thing is clear: the way we shop during the holidays is changing, and those changes are worth watching closely.
