Holiday 2024 will be one of the shortest holiday shopping seasons ever, and that will present a host of challenges for retailers.
Thanksgiving always falls on the fourth Thursday of November. In 2024, the holiday will be on Nov. 28, cutting five days out of the shopping season—27 versus 32 last year—between Black Friday and Dec. 25.
A shorter season generally has retailers fixed in their supply, as well as their delivery systems and fulfillment infrastructure for online orders, observed Forrester retail analyst Sucharita Kodali.
During a Commerce Next webinar, Kodali said the promotional volume will likely be similar to last year, with more promotions over the long holiday weekend from Black Friday to Cyber Monday. What’s more interesting is what they said they plan to do with shipping.
A Forrester survey saw only 6 percent of merchant respondents saying they were having fewer shipping promotions, while 22 percent were adding shipping promotions—but those promotions ranged from more days of free shipping to a lower threshold on free shipping to more products covered by free shipping.
“What I did think was interesting is that there are more retailers that are increasing that threshold of free shipping versus lowering that threshold. I think that also ties to some of the margin challenges that retailers may be facing themselves, particularly if they’re in a hyper competitive retail environment and inflation has meant that they haven’t been able to basically pass on all of those inflation [increases and] supply chain costs to the shopper,” Kodali said.
Related Stories
The ability to also offer free shipping offers on top of the inability to pass along costs to the consumer “may be a little too rich for a lot of retailers,” she concluded.
Merchants who responded to Forrester’s survey said they expect margins to be similar to last year, although about 30 percent expect that margins could be lower. “That’s likely part of the reason that shipping is not going to be as quite as generous for a number of retailers, particularly it they have the threshold-based shipping offers,” Kodali concluded.
She said that the ability to flex and increase shipments becomes harder later in the season. Currently, about one-third of the retailers responding to the Forrester survey expect to get packages to consumers in more than five days, with another 20 percent citing a four-day window. Only about two percent are looking at same day or next day.
Getting packages to consumers sooner represents an impact on margins, which many retailers might be loathe to do. But will consumers be willing to pick up the tab and pay for expedited shipping? Maybe not, which could end up shifting how consumers shops this year.
Kodali said the smaller window for standard delivery and the shorter timeframe for holiday shopping could shift consumer purchases from online to going into a store and “purchasing whatever is available to them locally.”
In addition, 80 percent of respondents said they aren’t planning on making any changes to their return policies. Of the balance, 10 percent said they were planning a stricter return policy, while the remaining 10 percent were planning a more lenient policy.
Another concern for all retailers centers on consumer spending for the back half of 2024.
Michael Gapen, head of U.S. Economics at Bank of America Securities, said the “economy is cooling.”
He expects economic growth going forward to moderate to around two percent, down from the recent three to three-and-a-half percent rate.
“We’re not expecting a slowing economy to lead to one that’s retrenching or about ready to roll over,” Gapen said. “We think the labor market will remain strong, although the unemployment rate is in the process of drifting modestly higher.”
In a BofA webinar on the mid-year outlook, Gapen said inflation does appear to be decelerating even if it remains somewhat elevated. “This is a very Goldilocks, soft landing kind of story,” the economist concluded. He described the “train we’ve been on” for the several years as a “virtuous cycle where employment leads to greater spending. Greater spending leads to greater employment.”
Gapen said there’s “solid enough income growth after adjusting for inflation” to keep consumer spending at the two percent range. He concluded that while that range is less than in the past, it still should be sufficient to keep the U.S. economy in expansion mode.
While much of the holiday shopping is still done in November and December, many consumers have started their shopping earlier as they pick up deals along the way. That seems to be a pattern all year, and several surveys have indicated that some parents began back-to-school purchases in June.
Regardless of when consumers are shopping, one thing remains clear: they’re on the hunt for deals.
According to Placer.ai’s head of analytical research R.J. Hottovy, consumers are getting fed up with higher prices on everything. “The consumer is looking for absolute lower prices than last year and the brands offering lower prices are taking visit share,” he said.
And according to a 2024 Retail Trendwatch report from Vericast, consumers will shop early when they are enticed to do so. More than half said they will purchase holiday gifts throughout the year depending on when they see a good deal versus waiting for the holiday shopping season. The primary reason for early shopping is to save money through sales and discounts, followed by the need to spread out expenses over a longer period. Thirty-one percent of parents are more likely than other consumer groups to do most of their shopping in October or earlier. And 44 percent of consumers plan to start shopping for the holidays in October or earlier, although that’s down from 47 percent in 2023.
As for online shopping, a Forter study conducted by Talker Research this past May found that the top three spending categories are groceries at 35 percent, apparel at 27 percent, and home goods at 17 percent. Respondents said they’d be loyal online shoppers are companies that offered free shipping, at 63 percent, followed by affordable goods at 61 percent and frequent sales at 36 percent. Rounding out the top five were free and easy returns at 34 percent and loyalty programs at 33 percent.
Jay Topper, former chief digital officer at Chico’s FAS and now chief customer officer at omnichannel order management and inventory systems platform Fabric, advocates that the compressed holiday season requires retailers to make sure early on that their product buying and allocation strategies are in place. He also said a truncated selling season means there’s less time to go through training cycles and hiring cycles for temp labor in stores and at distribution centers.
“Getting in sort of a war room environment a little bit earlier than normal so you can be prepared to pivot quickly, I think, is critical in a shorted selling season, ” he said during a Commerce Next webinar.
Retailers have been bringing in more volume over the past few months, and many are pulling forward the peak shipping season in anticipation of escalating freight rates and unresolved labor negotiations at the East and Gulf Coast ports.