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Consumers aren’t just resilient — they’re consistent. Despite lingering inflationary pressures, the National Retail Federation anticipates consumers will spend 2.5 to 3.5 percent more this holiday season than they did in 2023, it announced on a press call today. That racks up to $980 billion to $990 billion in sales between November 1 and December 31, which makes for another record-breaking season in comparison with 2023, which rounded out to more than $955 billion in retail sales.
That prediction might come as a surprise, considering Salesforce announced earlier this month that consumers might be hard to convert during the holidays. The San Francisco-based sales software company found that 40 percent of shoppers plan to spend less during the holidays in 2024, and 47 percent plan to spend the same as last year. Deloitte also released its holiday forecast in September, which predicted the slowest-paced holiday season since 2018.
Not to mention, this year’s holiday season is six days shorter than normal — with Thanksgiving falling on November 28 — which could impact retailer logistics, consumer expectations, and inventory pressures, and stress delivery and fulfillment requests.
The NRF agrees that sales have grown at a slower pace, but argues that retailers will still win big. “Consumer spending has been rather stable,” said chief economist Jack Kleinhenz on the NRF holiday forecast call. Black Friday has lost its luster and the holiday season starts earlier and earlier every year. Many retailers have already adjusted accordingly, he adds.
Kleinhenz says that consumer spending is pacing with the NRF’s yearly forecast, which also predicted annual retail sales to rise 2.5 percent to 3.5 percent in 2024. President and CEO Matthew Shay adds that retail sales were up 3.8 percent in first eight months of the year versus the same period in 2023, suggesting an optimistic continuation through year-end.
Nonstore and online shopping is the main driver of the holiday uptick, which is expected to rise as much as 9 percent from 2023, or up to $298 billion in total sales, according to the report. Last year, nonstore sales amounted to $273 billion, a 10.7 percent increase from 2022. But retail is far from dead, Shay says.
Nonstore commerce channels certainly help promote a more seamless experience for customers, but real estate is still critical for brands as engagement hubs. The main outcome of e-commerce, however, has made consumers more agnostic about where, what, and how they spend, Shay says. Households are still cautious about prioritizing their expenses and searching for deals on household necessities more than discretionary items, which reinforces the value of having multiple commerce channels.
While business owners prepare for inevitable headwinds, like a shorter shopping season or supply chain woes, they can look to lessons from the pandemic. Retailers “need to invest in supply chain resiliency” and relationships between stores and shipping partners, Shay says.
Relationship expectations
Every customer who walks through your door comes with expectations. Those expectations are based on previous experience with you or your competitor. The quality of service they receive is based on their expectations, not your service standards. If customer’s expectations are met they perceive good or great service.
Unfortunately customer’s expectations vairy greatly, but recently studies have shown that customers consider a smile and eye contact as an important part of good customer service. Everything over and above a sincere greeting customers consider the service levels to be great.
Do you have a good reading of your customer’s expectations? Have you measured your competitors service levels? Are you regularly measuring and reevaluating how you train your team to interact with customers? Give us a call, we’re here to help.
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SYDNEY SLADOVNIK AND CARL PHILLIPS