Halloween and Black Friday have ended. The holiday season is in full swing. Despite increased prices and inflation, The National Retail Federation has high hopes for this retail season. The organization predicts record spending this November and December: between 3 and 4% higher than 2022, to reach more than $957 billion. As consumers embark upon their holiday gift search, how they shop and pay for purchases continues to evolve.
According to Deloitte’s 2023 Holiday Retail Survey, e-commerce is expected to remain strong, with gains between 10 and 12% over last year. With more online purchases and factors like convenience, security, and health concerns impacting consumer behavior, so goes the continued rise of contactless payment solutions. Digital payment forms, like mobile wallets, eChecks, bank transfers, and apps like Google Pay share space with traditional methods on the checkout page, and it won’t be long before they surpass them. This trend drives retailers to embrace and integrate more payment solutions to remain competitive in the marketplace and meet consumer demand.
BNPL methods will be important this holiday shopping season. BNPL has been gaining popularity among consumers in the last few years. With shoppers anticipating higher holiday expenditures, BNPL will help many get over the financial hump. BNPL payments are interest-free and allow customers to pay in installments. As consumers become comfortable with BNPL options, they spend more. This encourages retailers to integrate these payment alternatives into their online checkout experience.
Gift cards will be as popular as ever this year. According to Deloitte’s 2023 Holiday Retail Survey, which polled 4,330 consumers between Aug. 30 and Sept. 8, shoppers plan to spend about $300 on gift cards, up from $217 in 2022. The traditional notion of the gift card is changing, however. No longer does a gift card equate to a physical piece of plastic. Technological innovations integrated with online store gifting solutions have given gift cards a digital makeover. Instant, convenient, and customizable, digital gift cards are an excellent choice for harried shoppers. For recipients, they are easy to redeem.
To deliver personalized shopping experiences to customers, online merchants beefed up their efforts to collect consumer data for pre-holiday marketing schemes. The applications for this data extend to the checkout process, with simplified authentication and customized payment alternatives. AI integrations can also use customer data to learn customer preferences and tailor the shopping experience.
Many shoppers have grown concerned about sustainability over the last several years, particularly within the Gen Z cohort. Those who practice ethical consumerism will seek out businesses that make social responsibility a priority. Carbon-neutral payments are one of the ways retailers can show their support for the environment. Donating proceeds from sales to environmental causes is another way for merchants and shoppers to effect positive change. These efforts create a partnership between consumers and retailers that fosters trust and brand loyalty. For customers, buying sustainable holiday gifts from eco-friendly stores is gratifying, and the goodwill from the experience will keep them coming back.
Despite the hopeful predictions for a prosperous holiday season for retailers, consumers still face higher costs and inflation. Fortunately, they have options about where they shop, and the market saturation will help keep pricing low. In addition to offering deep discounts, businesses must adapt to other changes in the consumer landscape to stay competitive.
Integrating AI and other innovations into the shopping journey will allow retailers to offer the personalized and streamlined experience that customers crave. More ways to pay will also satisfy consumers and serve a wider audience so more people can enjoy the holidays to the fullest.