The most wonderful time of the year for brands and retailers is almost upon us. Companies hoping to finish the sales year strong and meet their annual revenue goals rely heavily on the end-of-year holiday sales surge. For some brands, it’s a make-or-break financial season and, as such, there is immense pressure to make this last piece of the final quarter count.
“Holiday marketing for us is extra important because, as is typical with most retail, a majority of the sales are done in that fourth quarter of the calendar year,” said Stephen Yalof, president and CEO of Tanger.
The holiday shopping season has also become a prime time for brands and retailers to introduce their products to new audiences. As consumers flock to stores and websites in search of the perfect gifts for their loved ones, many shoppers are more open to trying out brands and products they may not be familiar with or have bought in the past.
This year, in particular, marketers are capitalizing on this phenomenon and tailoring their holiday advertising to attract customers who have not purchased their products previously. In a recent Modern Retail+ Research survey, slightly more than half of brands and retailers (52%) said that the primary audience for their 2024 holiday ads is new customers. Less than half of survey respondents (48%) said that the primary audience for their holiday ads this year is existing customers. While not a large difference, this marks a shift from past years’ results when marketers were more evenly split on whether the primary audience for their holiday ads was existing customers or new customers.
Against this backdrop — and with the impending holiday season upping the financial stakes for brands — Modern Retail+ Research examines which commerce channels are dominating marketers’ 2024 holiday sales plans. We also take a look at the promotional holiday discounts brands and retailers are offering, and the revenue expectations that are guiding their strategic decisions.
To ascertain what sales channels marketers are using the most during the 2024 holiday season and to uncover which marketing strategies they are using within those channels, Modern Retail+ Research surveyed 71 marketers about their past and current holiday sales channel use, and their past and current holiday marketing tactics. We also asked marketers how their current holiday season discounts and holiday revenue expectations compare to last year’s discount offers and revenue results.
We also interviewed executives at Bespoke Post, Tanger and Afterpay to learn about their plans and expectations for the upcoming holiday sales season.
During the 2023 and 2022 holiday seasons, marketers cautiously planned for seasonal revenue growth of 10% or less, according to Modern Retail’s previous holiday surveys. This year, however, brands and retailers are expressing more optimism about 2024 seasonal spending. More than one-third of survey respondents (35%) said that they expect their 2024 holiday revenue to increase 11%-30% in comparison to their actual 2023 holiday revenue.
Marketers’ healthy revenue growth expectations may be warranted. A recent report from global consulting firm Boston Consulting Group found that more than one-quarter of consumers (28%) plan to spend more this holiday season than they did last year. A slightly smaller percentage (27%) plan to spend less this year, and just under one-half of consumers (45%) plan to spend the same amount in 2024 as they did in 2023.
Several factors play a role in this growth outlook, according to Boston Consulting Group. Consumer consumption has continued to increase in the post-pandemic era; household incomes are strong relative to historical levels; and job growth and income growth are at similar levels to the pre-pandemic economy. However, the Group notes that high inflation, even with its recent cooling, has led to peak prices for consumer staples. As a result, shoppers may play it safe this holiday season, spending only the same as, or slightly more, than they did last year.
To make their 2024 holiday budgets stretch further, consumers will be searching for the best seasonal shopping deals. But brands and retailers may not fulfill their customers’ desires for deep discounts this year. In Modern Retail’s survey, the majority of respondents (71%) said they will offer similar discounts in 2024 as the discounts they offered in 2023. Nearly one-quarter of marketers (22%) said they offered deeper discounts in 2023 than they will offer this year. And, only 7% of respondents said that they will offer steeper discounts in 2024 compared to last year.
While most brands and retailers will not be changing the rates of their seasonal discounts this year, they may want to consider strategically offering online discounts and flash sales in order to encourage holiday spending. A 2024 consumer insights survey from technology company Bazaarvoice found that more than half of shoppers (52%) said they are more likely to purchase a holiday product online when the website they’re browsing provides a discount code.
Alvaro De La Rocha, CMO at digital menswear and lifestyle company Bespoke Post, told Modern Retail it’s important to offer deals to consumers who are shopping through digital channels. “Last year, Google shared data with us that [showed] the year-over-year increase in people searching for deal-related terms like ‘holiday deal/discount/sale’ was higher compared to gifting-related terms,” De La Rocha said.
However, De La Rocha cautioned about over-using sales. “Massive deals on great products is definitely core to our strategy,” he said. “But, we are mindful of not overdoing it because you don’t want to be purely trying to convince people to come to you on price always.”
When it comes to social media, more than two-thirds of shoppers (68%) said that they think dynamic pricing, such as limited-time offers and flash sales, is “at least somewhat” influential in the holiday shopping experience, according to Bazaarvoice’s consumer survey. Flash sales, in particular, encourage consumers to move quickly when making a purchase in order to take advantage of time-sensitive marketer discounts and promotions. This approach can be particularly useful for targeting consumers who have abandoned their carts, or are close to making a purchase, in order to push them over the final hurdle to purchase.
By leaning into online and limited-time sales discount strategies, brands can keep discount percentages the same year over year while simultaneously optimizing their discount offerings.
Previous year-over-year Modern Retail survey results have indicated that owned e-commerce and social commerce platforms are the most used sales channels during the holiday season. This year is no different. The majority of marketers plan to use their own e-commerce and social commerce sites to market their 2024 holiday promotions, according to Modern Retail’s survey.
Tanger, for example, has pivoted its holiday marketing approach to include more digital sales channels. “Over the last four years, we’ve digitally transformed our company,” Yalof said. “We know our customers are going to come out early. We know our customers are committed to spending, and so we’re using a lot of those digital strategies, whether it’s Facebook or TikTok or other digital methods, to get in front of our core consumer, as well as our young consumer.”
This aligns with sales analysts’ predictions that opportunity for growth lies outside of physical retail during the upcoming holiday season. Bain & Company has forecast that the 2024 holiday season will see a 3% growth in U.S. retail sales, with 0.5% attributed to in-store growth and 9.5% to non-store (e-commerce) growth. The higher percentage of projected non-store growth indicates that e-commerce sales remain a valuable market for brands to capture during the holidays. In Modern Retail’s survey, 71% of respondents agreed that their own e-commerce site grows more important to them during the holiday season.
When asked about other sales channels, survey respondents did not think the role of their own brick-and-mortar stores increased in importance as much during the holidays. Owned physical retail ranked second-to-last in increasing importance during the holidays among 44% of respondents. Additionally, 13% of respondents said that this channel actually grew less important during the holiday season.
However, other digital channels like social commerce did increase in importance to survey respondents. Seventy-six percent of marketers said that social commerce grows more important to them during the holiday season.
“Over the last several years, the e-commerce part of our offering has been what’s growing fastest,” Bespoke Post’s De La Rocha said, as he described the role of social media during the holiday season. “There’s a mix of demand generation and demand capture [on social channels]. On Facebook, a lot of what we’ve seen traditionally is demand generation, like through Advantage+ shopping campaigns,” De La Rocha added. “With Google, a lot of it has been demand capture. People are already searching for a specific item and, as a cross-category e-commerce retailer in all major categories, we often have things to satisfy many types of searches.”
For Tanger, taking an increasingly digital approach to sales has helped the retailer not only boost customer demand, but also better connect with customers. “As we transform our business digitally, we’re starting to communicate far more frequently and learn a lot more about our customers,” Yalof said.
Among the sales channels assessed for this report, e-commerce still has the greatest marketer usage during the holiday sales season. However, the rate of marketers’ e-commerce use has decreased since last year when 85% of respondents said they use their own e-commerce site for sales during the holidays. This year, only 78% of respondents have plans to use their own e-commerce sites for sales during the holidays.
On the other hand, marketers’ planned usage of social commerce and retailers (including Amazon) during the holiday season has increased in comparison to last year, from 61% to 71%. This can be attributed in part to younger Gen Z and Millennial generations who use social media as a point of discovery for new products and services. As these consumers seek out gift ideas on social media platforms during the holiday season, social commerce’s importance as a sales channel rises.
A recent research report from ad platform Basis Technologies and market research firm GWI found an increase in purchase intent among Gen Zers on social media platforms. According to the study, 20% of U.S. internet users across age groups ranging from 18 to 65-plus plan to buy holiday gifts directly through social media. However, as a generation, Gen Z is twice as likely to buy directly through social platforms, with 42% of Gen Zers saying they are likely to purchase holiday gifts through social media in 2024.
Marketers have also increased their planned usage of retailers (including Amazon) during the holiday season this year when compared to last year. Respondents who said they plan to use retailers other than Amazon increased from 48% last year to 49% and respondents who said they plan to use Amazon increased from 44% to 46%. Retailer websites can be an attractive sales channel for brands because they may attract more visitor traffic than a brand’s owned e-commerce site. However, the downside of selling products on retailer sites is that a brand faces competition from other brands also selling on the sites and the brand has little control over product presentation and placement.
While most retailers now have their own retail media networks that attract brands, Amazon stands out as a retail partner for many brands due to its streaming platform Prime Video – a unique offering among retailers. Amazon has made a concerted push to attract more advertisers to launch streaming TV advertising campaigns on Prime Video, including pitching its trove of first-party data so marketers can more precisely target ads. This summer, Amazon signed a deal to make it one of three partners of the NBA in an effort to attract new big-name brands to the marketplace.
Along with its streaming services, Amazon has also begun producing video commercials for brands that commit to spending $15,000 a month over 90 days on its streaming platforms. Brands that increase spending to over $125,000 gain extra tools like an in-commercial QR code and a brand lift report. For smaller brands, especially, handing off the creative process to Amazon can be a great cost savings measure since the brand no longer has to pay for additional services to create a commercial.
Amazon’s streaming video platform, plus its advertising services, make it an attractive retailer partner for brands during the holiday season. And, by connecting their ads to Amazon’s retail platform, brands can further promote their holiday sales.
As in prior years, marketers continue to bet on tactics like gift guides and influencer reviews, including hauls and unboxing videos, to market their products during the holiday season. Slightly over half of survey respondents (55%) said they expect to use gift guides as a marketing tool during the 2024 holiday season, and around half of respondents (51%) said they plan to use hauls and unboxing videos from influencers. These formats perform well as they offer inspiration for customers looking to buy gifts.
Consumers seeking new brands to purchase, or the latest products to give as gifts, often set a budget or intended price range. Gift guides and influencer recommendations are a convenient way to sort through numerous ideas and filter products by price. According to Bazaarvoice’s consumer insights study, 40% of U.S. holiday shoppers will check positive and negative reviews of a product before making purchasing decisions.
The largest agreeing group of respondents in Modern Retail’s survey also selected gift guides, hauls and unboxing videos, 37% respectively, as the marketing tactics that have historically worked best for their company during the holiday season. With social media apps at their fingertips, customers often turn to influencer videos to learn more about a product.
“Our largest campaign work with influencers happens during the holiday season, where our goal is to raise awareness and engagement of Afterpay’s platform,” said Alison Meyer, head of commerce marketing at Afterpay and Cash App, a financial services brand. “We work collaboratively with our brand ambassadors to align on the content that fits their niche, and provide any relevant messaging to anchor them on how to use Afterpay, but largely leave the creative concepting up to them so the end result still feels organic to their audiences.”
“We’ve historically seen immense success with our fashion creators and are starting to see the same success among new creator archetypes across home, beauty, fitness, pet, travel, and more,” Meyer added.
Similarly, Tanger has used influencer haul videos to capture a younger demographic of shoppers. “For our younger consumers, we’re finding that they love shopping live in our stores, then presenting on TikTok their shopping haul and opening up their bags and displaying the things that they bought at our center,” Yalof said. “We find that to be incredibly effective.”
Bespoke Post’s De La Rocha said unboxing videos are performing well for the company. “A lot of the ads that work for us are actually user-generated content,” De La Rocha said. “It’s influencers and content creators we send products to, to get their honest reactions. It has that authenticity and that genuineness versus a brand talking to you.”
Instead of paying influencers per post, Bespoke Post is building up its gifting program in which the company sends free products to influencers and asks them to post their authentic reactions to the items. “It’s less pay for play. We’re not paying them to create content for us, but rather saying ‘try this cast iron set out and post a video about it’,” De La Rocha said. “We’ve stepped away from paying large-scale influencers to talk about us. Now it’s more organic and authentic — gifting a product, and getting them to talk about our offering.”
On the opposite end of the spectrum of unboxing videos and gift guides, CTV/streaming ads and physical catalogs/direct mail have not historically performed as well for marketers during the holiday season. Only 19% of respondents respectively said digital ads and physical catalogs historically perform the best for their company. While those percentages are low, they are still higher than last year’s numbers. In last year’s survey, only 10% of respondents said physical catalogs and direct mail historically performed the best. And only 6% of respondents chose digital ads on CTV and streaming. This indicates an upward trend in marketers’ usages of both channels.
Additionally, this year’s survey results indicate that this holiday season brands are re-investing in traditional forms of advertising that they may have relied on less during the digital age. Survey results found that marketers’ use of digital ads on CTV and streaming rose this holiday season, along with their use of brand experiences, physical catalogs and direct mail.
“What’s increased over recent years was actually direct mail,” De La Rocha said, noting that Bespoke Post began sending a 20-page holiday catalog to potential customers in 2022 and found it to be very successful. “Since then, we’ve continued with that tactic,” De La Rocha said. “With the rise of digital channels, a lot of older ‘traditional channels’ have been forgotten about, and what happens is less demand and more attractive pricing. Then people start testing [these traditional channels], and it starts working.”
The timing of direct mail ads, in particular, is crucial, according to De La Rocha. “I avoid being early on direct mail because you lose some of that response rate,” he said. “If you’re hitting, let’s say, early October, someone may be gifting, and they may consider you. But once people are actually shopping, which with an election this year, may even shift later — you risk being lost.”
While sending direct mail too early could be detrimental, retailers hope to incentivize customers to shop in stores earlier in the year. “We might see more incentives pass through to the consumer earlier this year to stimulate that traffic earlier in the holiday selling season,” Tanger’s Yalof said. “With five fewer days [between Black Friday and Christmas], and the macro environmental noise in the marketplace, particularly in the month of November, retailers are going to be competing in a big way with a lot of things going on, and are going to need to really incent customers to get up, get out and get into their stores.”
- Brands and retailers are expressing more optimism about 2024 seasonal spending. More than one-third of survey respondents (35%) said that they expect their 2024 holiday revenue to increase 11-30% in comparison to their actual 2023 holiday revenue.
- Although consumers will be searching for holiday deals, brands and retailers may not fulfill their customers’ desires for deeper discounts this year. The majority of survey respondents (71%) said they will offer similar discounts in 2024 as the discounts they offered in 2023.
- As in prior years, marketers plan to use owned e-commerce and social commerce platforms are the most used during the holiday season. Over three-quarters of survey respondents (78%) plan to use their own e-commerce site for holiday sales, and 70% will use social commerce sites.
- However, marketers’ planned usage of owned e-commerce is decreasing compared to last year’s results. Last year, 85% of respondents said they use their own e-commerce site for sales during the holidays. This year only 78% of respondents said the same.
- Marketers’ planned usage of retailers (including Amazon) during the holiday season has risen compared to last year. Respondents who said they plan to use retailers other than Amazon increased from 48% last year to 50% this year, and respondents who said they plan to use Amazon increased from 44% to 47%.
- Marketers continue to bet on shopping inspiration tactics like gift guides and influencer reviews to market their products during the holiday season. Slightly over half of survey respondents (55%) said they expect to use gift guides as a marketing tool during the 2024 holiday season, and around half of respondents (51%) said they plan to use hauls and unboxing videos from influencers.
- With social media apps at their fingertips, customers often turn to influencer videos to learn more about a product. The largest group of marketer respondents (37%) selected hauls and unboxing videos as the marketing tactic that has historically worked best for their company during the holiday season.