Consumer Confidence in Economy to Creative Retail Marketing- The Key Drivers of 2023 Holiday Sales Trends by Trackier

New Delhi (India), February 16: As we’re moving ahead in 2024, the holiday sales 2023 numbers are here and they are more than just surprising. Falling in line with NRF’s prediction, the annual sales growth during the holiday season stood at 3.8% over 2022 to a record $964.4 billion, even in the backdrop of slow economic growth and inflation concerns. 

This growth was driven by the rise of online sales, which demonstrated astonishing growth in the US alone with 7% YoY growth from the previous year. In December 2023, the growth number stood at 11% YoY surpassing the early prediction of 3%. 

The question arises - what factors are fueling the expansion of online holiday shopping? Let’s explore this further. 

Consumers Time Their High-Ticket Purchase Around Holiday Sales

Inflation of consumer prices has been constant at a 4% increase every year since May 2023, putting a pressure on the consumer household. Although the prices were easing down after July, consumers tend to time their purchases of high-ticket items like electronics, luxury goods, etc. to lucrative holiday sales that offer additional discounts and cashbacks. If we look at the categories that saw the highest growth in sales, grocery, electronics, leisure, and luxury items are leading the trend. 

Easing Inflation

Another reason to which higher holiday sales can be attributed to is the pent up demands due to inflation up to July and pent up demands. The holiday sales often served as a strategic time for individuals to fulfill deferred buying decisions, taking advantage of promotional offers and discounts that are prevalent during this period. 

Better & Predictable Supply Chains

In 2023, the surge in holiday sales amid inflation challenges can be attributed to the implementation of better and more predictable supply chains. Companies have increasingly invested in enhancing their logistical strategies, adopting advanced technologies, and fortifying inventory management systems. This proactive approach ensures a seamless flow of goods, minimizing disruptions caused by inflation-related uncertainties.

Healthy Labor Market & Wage Improvement

Payroll employment adding 2.7 million jobs in 2023, leading to a healthy labor market and subsequent wage improvement. By the second half of 2023, the job market in the US improved significantly, thereby boosting consumer spending from 15343.55 USD Billion in Q2 2023 to 15461.38 USD Billion in Q3 2023. Although the numbers are lukewarm if placed next to historical data going back to the pre-pandemic time, the spending index was more than just satisfactory as opposed to the initial projections. 

Retailers Going Creative & All-Out in Discounts

Retailers took a smart move in 2023 holiday season by putting more emphasis on discounts and value-addition. As consumers were wary of rising prices, discounts were the best way to draw them to the checkout page and that’s what retailers cashed in. As per the data by Adobe Analytics, discounts peaked at 31% of the listed price in the electronics category, making it the most lucrative shopping category for the last season. (Read Full Report) 

Aside from the discounts, consumers were also drawn toward completing the sale by Buy Now Pay Later (BNPL) options. As per the recent data, $16.6 billion of online sales were driven by BNPL, 14% up from 2022 holiday season. 

Also, retailers tweaked their marketing strategies from 2022 by putting the spotlight on the value proposition of the product/service. They invested in creative marketing campaigns like virtual product visualizations, shoppable TV series on Netflix, and shoppable TikTok ads to reduce friction in the customer journey, allowing them to make a purchase without actually visiting the product website. 

The Road Ahead for Holiday Marketing 2024

Drawing inspiration from the 2023 holiday season, here are a few valuable lessons to glean.

• Mobile-first approach:Most shoppers in 2023 didn’t want to interrupt their scrolling journey on their phone to shop. Therefore, most of them preferred to shop for their holiday season via smartphone itself. This implies that retailers now have to focus more on mobile-friendly and social media-friendly campaigns instead of web. 
• Don’t just sell the product, sell value:Shoppers see the product and they might’ve seen it countless times before. But what draws them to hit the ‘buy’ button is the value the brand is offering. The value includes the benefits as well as the price point of the product - whether it’s reasonable, if not, is it available on a discount. 
• Get creative in advertising: Make use of social commerce, if you haven’t yet. Given the success of TikTok Shop and Shoppable Ads, it’s evident that 2024 marketing trends will be ruled by social media. Set some budget aside to set your TikTok shop and invest in shoppable content and ads to directly connect with your audience. 

Commenting on 2023 Holiday Sales Report Card, Udit Verma, CMO and Co-Founder of Trackier said, “After the dismal predictions, these results are a positive push for the retailers, filling them with optimism and vigor for the year ahead. These numbers are more than just surprise package, but a lesson that we cannot underestimate the dynamic nature of consumer preferences and behaviors, reminding businesses that staying attuned to the evolving needs and expectations of customers is paramount. Retailers and marketers who evolved with the changing face of consumer sentiment were welcomed into 2024 with smiling figures and a valuable lesson to continuously adapt, innovate, and prioritize consumer-centric strategies.” 

Third-Party Cookies Are Going Away! What’s Next? 

It’s official! 2024 will be the year when we’ll have to let go of third-party cookies. This transition isn’t going to be easy. Moving on is easier said than done, but isn’t entirely impossible. 

According to the data, 78% of retail programmatic targeting still rely on 3P. But 2024 has an opportunity for retailers to invest in data partnership and first-party (& zero-party) data offered up by consumers directly. Aside from this, many advertisers and brands are coming up with innovative ways to plug this hole. This includes acquiring data with consumer consent, offering value in return, and making a commitment to uphold their privacy. 

Having said that, 2024 is definitely going to be an interesting year in terms of advertising. Let’s see how brands and advertisers fare in terms of personalization and targeting in the absence of their ultimate weapon - 3PC. 

Disclaimer: This article is part of sponsored content programme. The Tribune is not responsible for the content including the data in the text and has no role in its selection.

Join Whatsapp Channel of The Tribune for latest updates.

#Trackier,2023 Holiday Sales