PMG’s 2023 Holiday Shopping Outlook
Abby Long is the Senior Managing Editor at PMG.
As the holidays draw near, marketers are preparing for another year of record-setting performance, with the 2023 holiday shopping season promising a renewed sense of predictability compared to years past. Across holiday forecasts, retail sales data, and consumer research, several trends are expected to be the driving force behind the holiday season.
Off to an Early Start: Holiday shopping will start early this year, with the ‘pull forward effect’ of Amazon Prime Big Deal Days and competing big-box retail sales in early October virtually kicking off the season and establishing consumer expectations for the remainder of the year.
A Cautious Spending Environment: Shoppers will be on the lookout for the best deals and savings all season long, exhibiting more price-sensitive behavior than in years past after a year of juggling growing concerns over the state of the economy and price increases.
Adobe Analytics estimates U.S. retail sales for the season will top $331.8 billion, up 4.8 percent year-over-year. Roughly 40 percent of shoppers plan to do a pretty even mix of shopping in-person and online this season, according to PMG’s consumer research. Other analysts and market research predict similar growth trends. Mastercard SpendingPulse estimates retail sales will grow 3.7 percent this year; muted growth compared to last year but indicative of continued consumer resilience amid economic volatility.
Ecommerce sales will continue to grow while brick-and-mortar shopping is predicted to return to pre-pandemic levels. Ecommerce sales are expected to increase 6.7 percent year-over-year while in-store sales see a nearly three percent lift (2.9 percent) in year-over-year growth. Analysts predict over half of online spending (51.2 percent) will occur on mobile devices, with mobile spending expected to hit an impressive $113 billion, totaling 13.7 percent year-over-year growth.
Roughly 40 percent of shoppers plan to do a pretty even mix of shopping in-person and online this season, according to PMG’s consumer research.
Salesforce forecasts that discount rates will briefly rise in October during early holiday deals and then peak during Cyber Week to average a 29 percent discount across categories. While Cyber Week will offer the steepest markdowns and deals, discounts are predicted to reach record highs throughout the season, up to 35% off listed prices, on average, with toys, electronics, and apparel offering shoppers the biggest savings and promotions.
In recent years, Amazon Prime Day sales and performance have been key indicators of consumer demand, spending patterns, and retail sales trends, and this summer’s mega-sale shopping event was no different. Despite a challenging retail environment, demand and sales growth during July’s Amazon Prime Day sale far exceeded the 2022 event, indicating consumers are eager to take advantage of deals and additional savings heading into the latter half of the year.
Amazon will host another Prime Day event in October, with other retailers announcing their own mega-sale shopping events ahead of the traditional holiday season to compete. So far, Target, Walmart, and JCPenney have announced competing and Prime-Day-adjacent mega sales events, with Macy’s and Kohl’s early holiday promotions expected to fall within the same early to mid-October period.
October’s Amazon Prime Big Deal Days and competing events will kick off the holiday shopping season with early deals and savings, spurring consumers to begin their holiday shopping early and setting the promotional agenda—and consumer expectations—for the remainder of the season. Nearly 40 percent of consumers will begin their holiday shopping in October in an effort to “spread out their gift-shopping budget,” according to the National Retail Federation (NRF). Around half of shoppers across age groups report they will begin their holiday shopping before Thanksgiving, up from around 40 percent in 2019, according to PMG’s consumer research and NRF data.
While macroeconomic data and consumer research show that U.S. consumers maintain the capacity to spend after a year of economic volatility (thanks to wage growth, low unemployment numbers, and rising property values), recent months have seen a notable shift in their overall spending patterns. PMG’s latest consumer research found that one-third of consumers have delayed purchases due to inflation this year yet report they plan to resume those purchases during the holiday season or have already resumed shopping.
October’s Amazon Prime Big Deal Days and competing events will kick off the holiday shopping season with early deals and savings, spurring consumers to begin their holiday shopping early and setting the promotional agenda—and consumer expectations—for the remainder of the season.
Shoppers are making more thoughtful, deliberate choices when it comes to spending, particularly on apparel and accessories, as they exhibit greater awareness of their financial well-being. Across age groups, Gen Z is the most optimistic about their personal finances, according to PMG’s consumer research. Interestingly, Gen Z is also 15 percent more likely to spend more on discretionary spending compared to last year’s spending patterns.
Most consumers plan to shop for 3 to 7 people this holiday season, including themselves, making gifting a top priority over other discretionary purchase decisions. In a September 2023 National Retail Federation survey, 61 percent of respondents said promotions and sales are “most important” when purchasing gifts this year compared to 2022, though finding the best deal is far from the only priority. PMG’s 2023 Holiday Shopper Insights Survey found that shoppers will increasingly prioritize finding the best value for the money over deals and discounts when gift shopping, reinforcing a growing appreciation for overall value.
Most consumers plan to shop for 3 to 7 people this holiday season, including themselves, making gifting a top priority over other discretionary purchase decisions.
Despite the challenges posed by rising costs across categories, consumers remain committed to maintaining their holiday shopping plans and are eager to shop and celebrate this season. For retailers, October features a crowded promotional environment as Amazon, Target, and other retailers offer a patchwork of mega sales events and early holiday deals. With these major retailers pushing promotions forward earlier into the calendar year, retailers are planning and budgeting for an extended holiday season, ensuring they are adequately prepared for an early start as demand dictates, with a flexible plan to engage in-market consumers wherever they are on their shopping journey.
Read more holiday insights & intelligence from the PMG team, including:
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