The Holidays are Here. What Should Retailers Expect to See This Season?
The five-day period between Thanksgiving and Cyber Monday serves as the traditional “kickoff” point for the holidays. It sets the tone for the entire season and offers insight as to what retailers should expect.
“Growth” has been they byword that defined the eCommerce market since its inception. In past years, online retailers saw explosive year-over-year growth in terms of both sales volume and dollars spent by consumers. That may be changing, though, if this year’s numbers are right.
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Consumers will generate $210 billion dollars in revenue for online retailers this season, according to data published by Adobe:
This is relatively anemic growth compared to previous years. At least, that’s the appearance at first glance; the truth is that it’s really a lot better than it looks. The numbers for this year’s season holiday point to two trends that have remained consistent, and become more and more pronounced each year:
Consistent spending throughout the season
Consumers spent more during October and November. So, while consumers were spending, they weren’t waiting for the traditional shopping weekend to do it.
Slower gains as market matures
The “Wild West” era of rapid growth in the eCommerce market is over. As eCommerce becomes a standard channel, growth will be more consistent and gradual.
What else can we learn from looking at the initial stats and figures tied to the 2022 holiday kickoff? We’ve identified some trends, statistics, and key takeaways based on the data that you can use to make this a winning season, and to keep that success rolling long after the holidays are over.
Holiday Kickoff 2022: Key Stats & Figures
Online consumer spend broke records in 2022 once again. 166.3 million shoppers took advantage of the deals and saving offered during the holiday weekend. Through all that activity, we managed to pick up on a few key trends this year:
Early Shoppers are Already Out There
As mentioned above, many consumers are starting their holiday shopping before November. When asked about the top reason they are shopping early, here’s what they said:
As we see, the reasons for this trend vary. Some consumers are hoping to avoid last-minute crowds, or take advantage of early-bird deals that come ahead of the traditional holiday shopping window. In the majority of cases, though, early shoppers see it as an opportunity to break up the financial burden to make it more manageable.
The lesson for retailers: offering better deals earlier in the season, rather than waiting until December, can help capture more sales in the long run.
BNPL is Booming
Shoppers are also taking advantage of new offerings that let them break up the cost of the holidays into even more manageable portions. Nearly half of Millennial and Gen-Z shoppers planned to buy merchandise using a buy now pay later (BNPL) option this season.
This isn’t without its own problems, though. The same article cited above also found that, of the Gen Z consumers who used buy now pay later to make holiday purchases in 2021, 43% had missed at least one installment payment.
Millennials Lead the Pack
Breaking with historical patterns, millennials are the only age group that actually plan to spend more this year than they did in 2021 (11% more, to be specific).
When looking at the amount spent on gifts, millennials plan to spend only slightly more than gen-x and boomer consumers. But, they plan to spend significantly more, on average, when it comes to travel and entertainment. Looking at total spend this season, including entertainment, travel, etc., the average millennial plans to spend $1,823.
This suggests that millennials are emerging as the dominant generation from a consumer standpoint. This makes sense, considering that many people in this age cohort are now entering their prime earning years, and are starting families of their own.
But, as we mentioned, a lot of that spending is on travel and entertainment, rather than consumer goods. People in this age cohort are on record as preferring “experiential” spending. That could transform the market in unpredictable ways in the coming years, so it's a trend to watch.
Mobile is King
In terms of sales revenue, mobile devices have been gaining ground on desktop devices for years. Now, mobile has clearly overtaken desktop as the preferred shopping channel.
Conversion rates on mobile devices are barely half those seen on desktop. What this suggests is that many consumers still choose to use mobile devices for browsing and research, but then conduct purchases through desktop or laptop.
Return & Chargeback “Season” Could be More Diffused
Every year over the last decade, there’s been a predictable surge in chargeback activity occurring in late January through the end of February. The “chargeback season” happens around this time every year because chargebacks are most common between 45-60 days after a purchase.
If shoppers opt to start shopping earlier in the year, though, this could lead to the post-holiday chargeback activity getting more diffused. Rather than a sudden surge in chargeback activity in the early weeks of 2023, we could start to see a rising tide of chargebacks beginning now, and continuing through February.
Key Trend #1: Holiday Shoppers Spreading Out Their Spending
Growth during Thanksgiving weekend and through December looks a little anemic at first glance. Remember, however, that shoppers might simply have already made the purchases they would otherwise have put off until December.
Like we mentioned above, consumers are increasingly moving away from the last-minute approach. They’re opting to spread out their holiday shopping throughout the last quarter of the year.
Shoppers are buying more during October and November than ever before. This makes sense for several reasons.
According to the National Retail Federation, the average American adult will spend $832 per person this year on holiday-related purchases. That’s a substantial bill, especially when accounting for external financial pressures like inflation. Lower- to middle-income individuals saying they plan to be more cautious when setting budgets for the holiday season.
By spreading their shopping out over several months, it can make holiday spending a much more manageable prospect for shoppers. Buyers can track sales over longer periods and try to get the best deal. Not only that, but breaking purchases up over several billing cycles is better than getting hit with sticker shock when that first credit card bill of 2023 arrives.
Key Trend #2: A More Mature Market Means Slower, Steadier Gains
eCommerce has only been a thing for about two decades. In those early years, online retail saw massive year-over-year growth as new buyers poured into the channel. Now, though, the online market is reaching maturity. As that happens, we’re unlikely to see the same kind of rapid gains.
Retailers can’t rely on an influx of new shoppers to serve as a tide that lifts all boats. The online market is going to get increasingly competitive as sellers fight for a share of the consumer pie.
Merchants that can secure a base of loyal, happy customers are in a good position. The key is to consider customer lifetime value, and allocate necessary resources to retention, rather than just acquisition.
37% of merchants in 2020 said they were allocating more of their budget to retention marketing. That makes sense; after all, boosting your customer retention rate by just 5% can increase overall profits by as much as 95%.
When your existing customers are ready to start doing their holiday shopping, you want to make sure your brand is the first name that comes to mind. Retention marketing is the best way to do that.
What’s the Takeaway?
So, now we’ve looked at some of the initial data. What key points should merchants take away going forward, though?
Get Ready for the Post-Holiday Season Now
As we mentioned before, customers are most likely to file chargebacks 45-60 days after a purchase. The spreading out of purchases across a wider span of time could lead to a more diffuse period of elevated chargebacks during — and after — the holiday season.
Global chargeback volume hit 615 million issuances 2021. Consumers are expected to have filed even more chargebacks this year. That’s why taking steps to manage risk is more important than ever.
Chargebacks911® offers the industry’s most comprehensive solution for chargeback management. Our end-to-end, data-driven platform allows you to effectively fight fraud on three fronts:
- Dispute Prevention: Intercept disputes and avoid chargebacks by replying in real-time with additional transaction information or refund confirmation.
- Dispute Recovery: Identify illegitimate disputes and automatically respond using compelling evidence. Reverse chargebacks and recover revenue lost to friendly fraud.
- Dispute Intelligence: Pinpoint the true sources of chargebacks and make informed decisions using the most accurate and actionable data.
With the industry’s only performance-based ROI guarantee, Chargebacks911 lets you control chargebacks with absolutely no risk.
Give yourself a holiday gift that will last all year. Contact Chargebacks911 today and give chargebacks the heave-ho ho ho.
