Source: Mark Hamstra, Contributor, US Chamber of Commerce

A focus on offering high-value gift deals, personalized offers, sustainability, and human customer service are among this year’s potential winning strategies for retailers and brands, analysts say.

Why it matters:

• For the holiday selling season, Deloitte estimates sales growth of 3.5% to 4.6%, versus 7.6% last year, as inflation abates, but consumers remain cautious buyers.
• According to the 2023 Holiday Shopping Trends Report from technology provider Celigo, nearly 50% of consumers said they plan to start shopping in September and October.
• This year, 69% of shoppers expect retailers to provide more personalized offers in addition to good deals and cost savings this year, the Celigo report found. And in a digital world, consumers are also looking for retailers and brands to provide live, human customer service during the biggest shopping season of the year.

Retailers and brands would be wise to calibrate their sales and promotional strategies this year, as cost-conscious consumers adjust their holiday shopping behaviors.

Ongoing economic uncertainty, combined with consumers’ increasing adoption of e-commerce and expectations for high levels of customer service, are among the factors shaping the year-end gift-buying landscape, analysts told CO—.

“We will see price-sensitive consumers, even though they will likely spend more this holiday season,” said Steve Rogers, Managing Director of Deloitte's Consumer Industry Center. “After two years of inflation, perception is the rule. So, price [driven] messaging will be necessary.”

Holiday retail sales are likely to increase between 3.5% and 4.6% in 2023, according to Deloitte’s annual holiday retail forecast, compared to 7.6% in the year-ago holiday period, which extends from November through January.

Meanwhile, upticks in consumer confidence over the summer recently reversed course. The Conference Board, which tracks consumer confidence, recently noted that its confidence index slipped to 106.1 in August, down from 114 in July and shy of the expected measure of 116.

Emphasize price/value propositions: ‘Highlighting the durability, longevity, and performance of products can justify higher price points’

“The upcoming holiday season offers several key opportunities for retailers and brands to boost sales, especially by emphasizing the concept of ‘value’ and capitalizing on the cost-conscious consumer mindset,” said Brett Rose, CEO of wholesale distributor United National Consumer Suppliers.

With many consumers keenly aware of price, retailers can capitalize on this both by offering competitive pricing and focusing on the value of their products, said Rose.

“Effective strategies include showcasing discounts, bundle deals, and exclusive promotions,” he said.

Retailers should also seek to strike a balance between value and price and highlight items that provide excellent value for the money, said Ross.

“Highlighting the durability, longevity, and performance of products can justify higher price points,” he said.

Rogers said successful promotional and sales strategies for the holidays should not differ much from the strategies deployed for the recent back-to-school season, despite the holidays being more of a “splurge” event than the commodity-driven back-to-school season. However, he said, retailers will need to account for the impact of the annual October Amazon Prime Day in their promotional and sales timing.

“Consumers are being trained to look for deals,” said Rogers. “This makes it important for retailers to message value early and often.”

"Reward loyal customers with exclusive discounts, early access to sales, or loyalty points that can be redeemed during the holiday season. This can encourage repeat purchases and help build long-term relationships", Brett Rose, CEO, United National Consumer Suppliers.

Rethink the calendar: ‘Consider holiday promotions well before the traditional season kicks off’
Although consumers have sometimes been known to wait until late in the season for the best deals, they also have had to endure product out-of-stocks in recent years and may begin shopping earlier this year.

According to the 2023 Holiday Shopping Trends Report from technology provider Celigo, nearly 50% of consumers said they plan to start shopping in September and October. The report also found that the traditional seasonal sales days of Black Friday and Cyber Monday are diminishing in importance, as fewer than half of respondents said those days are integral to their holiday shopping plans.

“Consider beginning holiday promotions and sales well before the traditional holiday shopping season kicks off,” said Rose. “This can help distribute consumer spending and reduce the holiday rush.”

Another reason to promote early in the season: on-time delivery for e-commerce orders. The Celigo survey found that 44% of consumers said they were unhappy with late deliveries for their merchandise during the holidays.

“By addressing the challenges shoppers faced in previous holiday seasons, U.S. retailers can proactively prepare for the upcoming rush,” the Celigo report concluded.

Personalize customer offers and product recommendations via loyalty programs

Retailers and brands should be able to use their customer databases and loyalty membership programs to create personalized offers and product recommendations for their customers.

The Celigo report found that 69% of shoppers expect retailers to provide more personalized offers in addition to good deals and cost savings this year.

In addition, retailers and brands should ensure they are treating their most loyal customers accordingly during the holiday season, with exclusive offers that can pay ongoing dividends, said Rose.

“Reward loyal customers with exclusive discounts, early access to sales, or loyalty points that can be redeemed during the holiday season,” he said. “This can encourage repeat purchases and help build long-term relationships.”

Deborah Weinswig, CEO of Coresight Research also agreed that “personalizing at scale to loyalty customers” could be a viable strategy this holiday season.

Offer live human customer service: ‘We need that human interaction’

Although the capability may exist to deploy chatbots or artificial intelligence (AI) solutions to provide customer service, consumers want live human contact, said Meghan Stabler, Senior Vice President of Marketing at BigCommerce, in a recent Future Commerce webinar.

“We don’t have much human interaction in our lives,” she said. “We need that human interaction.”

AI thus far has not proven itself as a suitable replacement for live humans when it comes to providing online customer service, she said, although it does have potential for providing more personalized customer experiences online. For example, if a retailer knows that a certain customer prefers to check out using Apple Pay, an icon for Apple Pay can be prompted to automatically appear at checkout.

Consider more sustainable product fulfillment options

The holiday season tends to involve a lot of excess, but that doesn’t necessarily mean there has to be an abundance of waste.

Retailers and brands can take steps to minimize their packaging or use more eco-friendly packaging to cut down on their contribution to landfills and pollution. Assuming they have the evidence to back it up, brands that do this should promote it as a part of their holiday marketing messaging. It’s especially important to younger consumers, Stabler said.

In addition, brands should look for opportunities to recycle used product whenever possible, or at least help consumers dispose of the products they are replacing. Stabler cited the example of Skullcandy, the headphones manufacturer, which offers a 30% discount on a new pair of headphones for customers who return an old pair.

Consumers are increasingly going to expect these kinds of activities, Stabler said.

In addition, brands and retailers that take steps to minimize product returns — and thus the packaging, transportation, and product waste that are involved with sending products back to the retailer or manufacturer — can earn bragging rights with consumers, she said.

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