For most retailers – including tea businesses – the holiday season is a critical time to boost sales.
This year, U.S. holiday retail sales are likely to increase between 3.5 and 4.6 percent, according to Deloitte, a financial advisory firm.
Overall, Deloitte's retail and consumer products practice projected that holiday sales will total US$1.54 to US$1.56 trillion during the November to January timeframe. In 2022, holiday sales grew by 7.6 percent in the same period.
Deloitte also forecasted that e-commerce sales will grow between 10.3 to 12.8 percent, year-over-year, during the 2023-2024 holiday season. This will likely result in e-commerce holiday sales reaching between US$278 billion and US$284 billion this season.
Sales Volume to Continue to Grow in 2023
Daniel Bachman, Deloitte's U.S. economic forecaster, noted, “We expect healthy employment and income growth to keep the volume of sales growing for the 2023 holiday season. Inflation, which accounted for much of the increase in the value of retail sales last year, should moderate. This means the total value of retail sales will grow more slowly than last year. Our forecast also reflects a decreasing pool of pandemic-era savings, both of which will weigh on retail sales and are reflected in our lower projected growth for the season.”
Nick Handrinos, vice chair of Deloitte, as well as U.S. retail, wholesale, distribution and consumer products leader, said retail sales should be strong for the upcoming holidays.
“Retail sales are expected to increase even as higher prices continue to create a battle for consumer spending,” explained Handrinos. “A sharp rise in spending on services post-pandemic shows signs of leveling off since last year, and compared to pre-pandemic levels, spending on durable goods remains high. This season e-commerce sales should continue to be strong as consumers search for the best deals online to maximize their wallets. Retailers who remain flexible to shifting consumer demand and behaviors will likely be poised for growth this holiday season.”
‘We Expect Strong E-Commerce Growth This Season’
Similar to Deloitte’s e-commerce holiday sales prediction, Adobe Analytics data predicts that between Nov. 1 and Dec. 31, 2023, U.S. online holiday sales will hit US$221.8 billion, representing 4.8 percent growth year-over-year (YoY).
In the 2022 season, shoppers spent US$211.7 billion online and saw 3.5 percent YoY growth.
Adobe Analytics is part of Adobe Experience Cloud, relied upon by over 85 percent of the top 100 Internet retailers in the U.S. to deliver, measure and personalize shopping experiences online.
“Despite an unpredictable economic environment, where consumers face several challenges including rising interest rates, we expect strong e-commerce growth this season on account of record discounts and flexible payment methods,” said Patrick Brown, vice president of growth marketing at Adobe. “Buy Now, Pay Later in particular has become increasingly mainstream and will make it easier for shoppers to hit the buy button, especially on mobile devices where over half of online spending will take place.”
A Look at the ‘Buy Now, Pay Later’ Method, Which Continues to Grow
The flexible “Buy Now, Pay Later” payment method is expected to set new records this season, according to Adobe, driving US$17 billion in online spending, up 16.9 percent YoY and US$2.5 billion more than last year.
Adobe expects BNPL spending to hit $9.3 billion in November, making it the largest month on record. Cyber Monday is also set to be BNPL’s largest day with US$782 million in spending, surpassing Cyber Monday 2022’s daily record of US$658 million.
Adobe said BNPL has already seen strong traction this year. Thus far in 2023, BNPL users have spent $46.7 billion, up a significant 14.7 percent YoY and US$6 billion more than during the same period last year.
BNPL growth has been driven by categories including groceries, per Adobe, where its share of spending grew by a staggering 37.5 percent YoY.
A recent Adobe survey of more than 1,000 U.S. consumers found that one in five respondents plan to use BNPL to purchase gifts this holiday season.
Record Discounts Expected This Holiday Season, Especially During Cyber Week
Adobe noted that it anticipates retail discounts will hit record highs – up to 35 percent off listed prices – this holiday season, as retailers contend with an uncertain spending environment and consumers who continue to deal with rising costs in areas such as food and gas.
The deepest discounts are expected to hit during Cyber Week, the best time to shop for bargain hunters.
Cyber Week – the shopping period including Thanksgiving, Black Friday and Cyber Monday – is expected to drive US$37.2 billion in online spending, up 5.4 percent YoY and representing 16.8 percent of the holiday season.
Adobe said it expects Cyber Monday 2023 will remain the season’s and year’s biggest shopping day, driving a record US$12 billion in spending, up 6.1 percent YoY.
Black Friday online sales are set to grow by 5.7 percent YoY to US$9.6 billion, with Thanksgiving growing 5.5 percent YoY to US$5.6 billion.
Driven by deep discounts, the big Cyber Week shopping days remain important anchor points for retailers during the holiday season.
While Cyber Week is expected to have the best deals, consumers started to see bargains as early as the second week of October, where discounts were expected to be as high as 18 percent.
Consumers Will Prioritize Winter Holiday Spending and Look for Pre-Season Sales
According to new Mintel holiday research, nearly half (44 percent) of U.S. consumers who plan on shopping during the 2023 winter holiday season say they plan to do so during a pre-season sales event, and that holiday shopping staples – such as Black Friday and Cyber Monday – will remain popular as consumers' budget-focused mindset continues.
In addition, Mintel predicted that consumers will remain cautious during the upcoming holiday season and maintain a budget-conscious mindset as they try to rebound from the financial pressures of the last few years.
Per Mintel's research, more than a quarter (28 percent) of winter holiday shoppers agree that it is even more critical to shop on Black Friday or Cyber Monday because of inflation/rising prices.
Adobe noted that three in five (59 percent) consumers who plan to do winter holiday shopping in 2023 say they want to spend the least amount of money possible. However, consumers will continue to prioritize winter holiday spending and are expected to leave room in their budget for gifting and celebrations, as 62 percent of winter holiday shoppers say they are excited to resume more in-person events and gatherings.
Mobile Shopping to Overtake Desktop
Of note: Adobe shared that shopping for the holiday season will overtake desktop for the first time.
The company anticipates more than half (51.2 percent) of online spending will take place on mobile devices this season, a milestone reflecting improved small screen shopping experiences.
Mobile spending is also set to hit a record US$113 billion, up 13.7 percent YoY, according to Adobe, with usage peaking on days when consumers are likely with friends and family, such as Thanksgiving and Christmas.
To Succeed During the Holidays, Retailers Must Offer Promotions All Season Long
Brittany Steiger, retail and e-commerce analyst at Mintel, offered some tips for retailers that want to come out ahead this holiday season.
“To remain competitive, retailers must position sales and promotions throughout the season and consider personalized deals that are tailored to consumers' preferences,” Steiger shared. “Our research shows the most popular retail promotions are percentage-off discounts, BOGO deals, gift card offers and free gifts with purchase. While direct communications and social media will have the farthest reach, partnering with third parties such as shopping portals – e.g. Honey – can be a great way to consolidate deals into one place, making it easier for consumers to shop by deal."
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