Holiday retail sales will grow 4.5% to reach $1.317 trillion this year, according to our forecast. Retailers who want to carve out a share of that spend will need strong promotional strategies and a seamless digital-physical experience. It’s also not a bad idea to have a plan ready for when the returns start rolling in.

Here are five charts to help retailers get ready for the busiest time of the year.

1. Deals are a mainstay for the time being

Discounting will be a key strategy for retailers to score a share of holiday spending this year, especially in discretionary categories like toys, consumer electronics, and any big-ticket items.

Budget-strapped consumers are also likely to explore alternative payment options like buy now, pay later (BNPL). Retailers should consider partnering with BNPL providers both online and in-store.

2. Prime Day is a predictor of holiday ecommerce sales

Over the past three years, Amazon Prime Day sales have been a bellwether for ecommerce sales during the holiday season, and we expect this year to be no different.

Based on July’s Prime Day event, home goods, apparel, and shoes could be the top sellers this holiday season. However, consumers are likely to wait for a good deal before they make a purchase. Expect lots of comparison shopping and holding out for last-minute deals.

3. Make the digital-physical gap as narrow as possible

As consumers scramble for last-minute party supplies or gifts, they want to browse, purchase, and pick up items in the ways that are most convenient for them. Retailers that provide a consistent experience across their digital and physical channels will be the winners of the holiday season.

4. Have a plan to handle returns

Consumers made significantly more returns during the last holiday season when compared with the 2021–2022 season, per Salesforce.

To keep the number of returns down this season, retailers should be sure their product pages are as comprehensive as possible, with customer reviews, photos, and video included. Retailers should also be on the lookout for bracketing behavior (where shoppers buy multiple products in different sizes or colors with the intention of keeping just one) so they can put tools in place to prevent it, like including a size chart or giving shoppers the opportunity to speak to a customer service representative.

Instituting a return fee is also an option, but there’s always a chance it could backfire and send customers flocking to fee-free competitors.

5. Social commerce success hinges on the platform

Brands that want to experiment with social commerce this holiday season need to make sure they’re targeting the right audience on the right platform.

For example, Gen Z prefers to make purchases on Instagram, YouTube, and TikTok, according to Jungle Scout. But Facebook is the platform of choice for the general US population. Campaigns should be tailored to each platform to ensure maximum effectiveness.

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