14 December 2022
Retailers eye big finish to holiday shopping with last-minute deals
158 million shoppers are expected on Super Saturday, NRF forecasts.
Photo by freestocks on Unsplash
158 million shoppers are expected on Super Saturday, NRF forecasts.
The holiday shopping season is expected to see a big finish in 2022, as consumers hold out for deals in an unusually promotional environment.
So, in a year where shopping events began early, it is fitting that there will also be late deal events that draw heavy traffic.
Super Saturday, which arrives on Dec. 17, is expected to draw 158 million consumers to stores of the physical and digital variety, according to a survey released by the National Retail Federation and Prosper Insights & Analytics. That figure would be about 10 million more shoppers than last year’s expected total for the final Saturday before Christmas, and the highest traffic since NRF began tracking the data for this shopping day in 2016.
As with the rest of the holiday season, this shopping will cross physical and digital channels. On Super Saturday, 28% of shoppers plan to shop only in-store, while 27% plan to shop online only. About 46% of consumers plan to shop across both ecommerce and brick-and-mortar.
The survey of 7,857 consumers showed that consumers are heading into the weekend saying they have completed about half of their purchases.
Top gift items so far include clothing (50%), toys (34%), gift cards (28%), books and other media (26%), and food or candy (23%). A further 28% are planning to gift an experience such as tickets, a gym membership or a class.
When it comes to payments, about 52% of consumers said they are using alternative payments or digital wallets. That’s up 44% from 2021. Top alternative methods are PayPal, Apple Pay and Cash App.
Execpted shoppers on Super Saturday, 2016-present. (Source: NRF)
“With Super Saturday falling eight days before Christmas, retailers are prepared to help shoppers fulfill their last-minute purchases that will make this holiday season memorable,” said NRF CEO Matthew Shay, in a statement.
This year’s holiday season comes against a backdrop of inflation and interest rate hikes that is leaving consumers seeking deals. Retailers have been discounting heavily to accommodate this, but executives have admitted it is a difficult year to forecast.
While strong Black Friday weekend numbers were reported across the ecosystem, brands and retailers have also been voicing expectations that last-minute purchases will be strong. The weekend arrival of Christmas allows for an extra Saturday in the season, and consumers are seeking to stretch their dollars as they show a willingness to take an extra look to get a better bargain.
“We see browsing, and they'll be waiting, we think, until later in the season, making sure they get the very best value that they can,” Signet Jewelers CEO Gina Drosos told analysts on the company’s earnings call last week.
In a year that saw October savings events, there are also signs that retailers want to galvanize energy around the last-minute push.
Amazon this week launched a new round of savings dubbed the Very Merry Deals event on Dec. 12, and it runs through Dec. 21.
Target, meanwhile, is promoting savings on Super Saturday, as well as the week leading up to Christmas. The retailer will also offer same-day delivery and pickup services on Christmas Eve.
Add these to holiday kickoff sales in October, Black Friday and Cyber Monday on the ecommerce holiday shopping calendar.
Retailers are expecting shopping activity to stay strong through the end of the year, as well. The NRF/Prosper survey indicated that 70% of consumers plan to shop after Christmas, as they use gift cards, seek out additional deals and return items. That volume of traffic would be in line with pre-pandemic patterns.
“This will be one of those years where we're watching sales closely up until the last minute of Christmas Eve, and then we'll do a lot of business after Christmas,” Walmart CEO Doug McMillon told analysts on the company’s recent earnings call.
The retailer's marketplace is expanding quickly.
When it comes to ecommerce growth, was the pandemic a blip or a new trendsetter?
As we move further from the height of COVID-related closures, it’s a question that will start to be answered through the lens of history.
So far, the narrative of ecommerce growth in the U.S. from 2019-2022 has gone like this: Ecommerce’s share of overall retail saw a huge spike at the height of the pandemic in 2020-21, when goods in general were in demand and online shopping was necessary to preserve health and safety. Experts looked out and saw a permanent exponential change in the penetration of ecommerce as a share of retail that would last beyond the pandemic. Then, in 2022, everyone went back to stores and the trendline came back to 2019 levels. Growth was no longer exponential. There was still growth, but it was not happening as fast as during the pandemic period.
With this in mind, it’s worth pointing out that 2023 is the first year that there likely won’t be a pandemic-influenced swing to influence ecommerce growth. It is also a year where demand has suffered challenges amid inflation and interest rate hikes.
So as we seek to determine the importance of ecommerce to overall retail, it’s worth it to continue taking a close look at what growth trends retailers are seeing now, whether ecommerce is remaining resilient amid consumer pullback and how retailers are preparing for the future.
The latest example arrived this week from Macy’s. It’s a fitting one for the times. Overall, Macy’s is seeing a slowdown as consumers pull back on discretionary purchases, with sales declining 7% in the first quarter versus the same quarter of 2022. Digital sales were down 8%.
Macy’s is particularly susceptible to the macroeconomic headwinds that many brands and retailers are facing, as spending among the middle-income consumers it counts as a primary customer base is particularly softening, said GlobalData Managing Director Neil Saunders.
But while ecommerce is slowing overall, the importance it gained to Macy’s business during the pandemic is remaining in place.
In 2019, ecommerce made up 25% of Macy’s revenue, CEO Jeff Gennette told analysts on the company’s earnings call. That jumped to a high of 44% in 2020. By 2022, digital reached 33% of sales after the pandemic boom. In the first quarter of 2023, it remained at 33%. So, while the trend line dipped after shoppers returned to stores, ecommerce share still settled in at a higher post-lockdown point than it was before the pandemic.
This came in a quarter in which traffic was “relatively good” across both online and in-store, Macy’s CEO Jeff Gennette said. It was “flattish” online, and slightly up in stores.
“We do expect that this is the reset year with the penetration between them,” Gennette said. “But we do expect more aggressive growth in digital in the future versus stores as we think about '24 and beyond. And that's going to be foisted by a lot of ideas and strategies.
Over the last year, the retailer has made investments in boosting ecommerce, even as shoppers returned to stores. In a bid to boost the assortment of goods available online, Macy’s launched a marketplace in September 2022 that welcomes goods from third-party sellers.
The marketplace had an “outstanding” first quarter, said Macy’s President Tony Spring, who is poised to succeed Gennette as CEO next year. Gross merchandise value increased over 50% when compared to the fourth quarter of 2022, while the average order value and units per order for marketplace customers was 50% above those not shopping at the marketplace.
Macy’s is continuing to build the marketplace even as it racks up sales. The retailer added 450 brands, ending the quarter with 950 brands.
This is helping to draw in new customers, as well as younger existing customers who are buying more items, resulting in increased basket size.
“We're very excited as to how marketplace is really attracting the Gen Z customer, particularly in categories where it was not economically feasible for us to carry in the past,” Gennette said.
In the end, Gennette said a strong digital and social presence is key to attracting younger consumers. That's a different type of shopper than other age groups.
“We know the younger customer starts first online,” Gennette said. That behavior will still be in place as the generation gets older, and gains more buying power in the process.
Going forward, Macy’s is seeking to expand the model to other retail banners in its portfolio. Bloomingdale’s will open a marketplace in the early fall.
The Macy’s ecommerce trajectory isn’t that different from the wider U.S. ecommerce narrative detailed above. With one quarter of 2023 data, there is evidence that ecommerce share settled out at a higher point after the pandemic than where it started before COVID arrived. There is flattening now, but the retailer is taking it not as a sign of a slowdown, or a signal to change course. Rather, it sees changing consumer behavior as a reason to build for the future.