This year’s annual Festive Forecast indicates strong consumer desire to strategically spend on gifts and industry optimism despite looming effects of the economy
After a year of uncertainty driven by inflation and recession concerns, new research from Square and Afterpay indicates positive consumer confidence heading into the holiday season, with 34% of consumers planning to spend more. To capitalize on this optimistic consumer outlook, 71% of sellers expect sales to increase this festive season as they lean into new commerce plays to meet consumers where they are shopping.
While consumers intend to shop more this season, saving remains a priority. The Square and Afterpay Festive Forecast reports 71% of Americans will shop for cheaper alternatives as they look for deals to maximize their savings, which aligns with most businesses’ plans to offer an average discount of 15%. To engage with consumers, merchants are leveraging various omnichannel tactics such as hosting a curated holiday event (51%) and offering special deals through loyalty programs (39%).
Since money management is top of mind for consumers, consideration of credit card use for gifting purposes is decreasing while ‘Buy Now, Pay Later’ (BNPL) preference increases. As consumers seek more flexible options at checkout, 40% of Americans will choose BNPL to help them budget and manage their money during the holidays. Shoppers cite benefits of leveraging BNPL for its fast and easy checkout process (34%) as well as being a safe and secure way to pay (29%).
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Key Festive Forecast highlights include:
- Giving season: The most popular gifting categories are apparel and gift cards, followed by electronics and gadgets. Technology gifts have increased by 5% year-over-year.
- Early birds get the worm: The bulk of Americans plan to have all of their holiday shopping done in November; a 5% year-over-year increase.
- Omni-present: Consumers are fairly split between in-person and online channels when looking for the perfect gift, indicating a balanced omnichannel approach is crucial to meeting shopper needs and wants this season.
- Smart assistant: Currently, 23% of sellers are planning to leverage AI to streamline operations and marketing.
- Mobile all the way: Popularity of new emerging channels such as shopping apps (31%) and wish list sites (22%) validate the need for businesses to nail down their mobile commerce strategy by leveraging automated technology and having a strong content strategy in place.
- Discounts stay steady: 72% of sellers are confident in their discounting strategy and have no plans to increase or decrease sales compared to last year.
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“Neuroscientific studies reveal that ‘feel good’ chemicals such as oxytocin and endorphins are released when we enter the celebratory spirit. Consumers want to experience this earlier each year and are combining this desire for enjoyment with a savvier mindset; shopping with intention for themselves and their loved ones, and gifting items that can stand the test of time. With this quality over quantity mindset, consumers can shop more mindfully from brands aligned with their values, creating a more enjoyable and less stressful shopping experience for themselves,” said Shakaila Forbes-Bell, Afterpay Fashion Psychologist.
With these findings in mind, Square and Afterpay offer key ways businesses can prepare for the holiday season:
- Implement AI-enabled conversational commerce tools such as suggested replies in Square Messages to streamline customer service and maximize staff output to focus on other critical tasks.
- Encourage shoppers to come into stores by offering unique experiences or exclusive offers and merchandise, enabling your business to expand its revenue streams.
- Consider shopping and wishlist apps, such as Afterpay, as new channels to increase your brand discovery, promote products, and reach new consumers.
Methodology
Consumer findings were based on a survey conducted of 1500 US consumers between July 21 to July 31, 2023. The core sample data was nationally representative across age, gender, and location with an additional sample of 500 for Gen Z and Millennials. Industry findings were based on a survey of 265 Square sellers in the US conducted between August 8 and August 19, 2023.