The year-long awaited holiday period is quickly approaching, pushing brands to provide their best sales strategies to reap the maximum benefits of the season. Year after year, a consistent pattern occurs: the holidays equal a sales increase, with some brands reporting as much as a 30% growth in revenue compared to nonholiday months. As 2024 has been a turbulent year for beauty—evidenced by the continuous reports of a drop in consumer spending—several businesses will be banking on the holidays to fill any profit margin gaps accumulated in previous months.
Adobe Digital Insights 2024 Holiday Online Shopping report positively affirms forecasted success for this year's Christmas hustle and bustle. Based on data from a trillion visits to retail sites, 100 million SKUs, and 18 product categories, the study predicts a record $240.8 billion in online sales between November 1 and December 31—an 8.4% year-over-year (YoY) increase from 2023 ($221.8 billion).
"The holiday shopping season has been reshaped in recent years, where consumers are making purchases earlier, driven by a stream of discounts that has allowed shoppers to manage their budgets in different ways," says Vivek Pandya, lead analyst at Adobe Digital Insights. "These discounting patterns are driving material changes in shopping behavior, with certain consumers now trading up to goods that were previously higher-priced and propelling growth for US retailers."
The report provides key insights into consumer behavior, discounting trends, the growing impact of mobile shopping, social media influencers, and emerging technologies like Buy Now, Pay Later (BNPL), and generative AI. BeautyMatter outlines the need-to-know information.
Records Revealed
This year's cyber week (the shopping period including Thanksgiving, Black Friday, and Cyber Monday) is forecast to amass $40.6 billion in online spending—a 7% YoY growth from last year, which will represent an anticipated $16.9% of the overall 2024 holiday season total sales. According to the report, 71% of consumers say they plan to shop online on Black Friday, with 70% saying they proactively check for deals throughout Cyber Week.
Cyber Monday is expected to remain the biggest shopping day of both the season and the year, churning out a record $13.2 billion in consumer spending, up 6.1% YoY. Black Friday follows closely behind, predicted to see $10.8 billion worth of expenditure, up 9.9% YoY. Despite not being the highest figure on the list, Thanksgiving Day sales are expected to outpace Cyber Monday when it comes to YoY growth, with an anticipated $6.1 billion in spending, up 8.7% YoY.
Sensitive Spending
As companies compete for coins this sales season, Adobe predicts high discounts, anticipating a common figure of 30% off listed prices across brands (on par with the 2023 season). Despite no further discount compared to last year, reduced pricing is expected to have a more pronounced effect this year than last, as consumers remain price sensitive, with data showing shoppers taking advantage of promotional events after a year of persistent inflation. This year, for every 1% decrease in price during promotional events (Prime Day, President's Day, Memorial Day, and Labor Day), demand increased by 1.025% compared to the previous year. So far, in 2024, this has accounted for an incremental $305 million in online spending. For the upcoming holiday period, Adobe expects to continue to see a strong consumer response to discounts, contributing to between $2 billion and $3 billion in online spending—factored into the overall $240.8 billion spend forecasted for e-commerce.
Beneficial Buy Now Pay Later
Although consumers are willing to spend a little more over the holidays, they are still making attempts to spread these costs as much as possible. BNPL is predicted to set more records during the holidays, driving $18.5 billion in online spending, up 11.4% YoY. The report reveals that BNPL is expected to hit $9.5 billion during the month of November, making it the largest month on record. Cyber Monday is set to be BNPL's largest day on record at $993 million.
BNPL is anticipated to be driven primarily by mobile shopping. So far this year, BNPL from mobile has taken 79% of the sales share, compared to desktop at 74.1%. The survey shows that 39% of millennials plan to use BNPL services this season, followed by 38% of Gen Z. Most common reasons cited for using BNPL include freeing up cash (per 22% of respondents) and the ability to purchase something they couldn't afford in one payment (19%).
Tenacious Trade Up's
In previous quartiles of 2024, outside of discounting periods, shoppers have embraced cheaper (full-priced) goods across major e-commerce categories. To analyze each of the 18 categories tracked by Adobe, prices were separated into four quartiles from the highest to lowest prices. Shares of units sold in the most expensive and least expensive quartiles were then tracked from April 2019 to August 2024. As a result, it was found that the share of cheapest goods increased by 46% across all categories. On the other hand, the share of the most expensive goods decreased by 47% during the same period. However, this trend is forecast to reverse itself for the upcoming holiday period, with the share of the most expensive offerings set to grow by 19%, primarily driven by competitive discounts, meaning brands could make the most of sales for their higher-priced SKUs.
The Timeline Trajectory
The highest discounts are predicted to be positioned during Cyber Week, with the biggest deals set to happen before the big Cyber Monday event, which is predicted to be the best day to shop for electronics, apparel, and cosmetics—three of the biggest categories in the holiday e-commerce revenue share. Despite it only being October, consumers anticipate deals that begin mid-month, fueled by Amazon Prime Day, which is expected to drive discounts across major US brands, seeing up to 16% off selected brands listed prices. Discounts are then set to surge again beginning November 1 to November 23, with a predicted 18% off usual price listings. Adobe states that the date variation will allow consumers the flexibility to manage their budgets. After Cyber Week, holiday discounts are predicted to remain until the end of December, with an average of 15% off usual pricing.
Social Media Secures Sales
The report confirms that among major marketing channels, paid search has remained the top driver of retail sales (28% share of online revenue from January 1 to September 3, 2024) and is expected to grow by 1% to 3% during the holiday season. Affiliate and partner sales (including social media influencers) are expected to provide the fastest sales growth, increasing by 7% to 10% during the forecast period. Social media is set to offer additional sales growth of between 4% and 7%; however, Adobe reveals that influencer posts are converting shoppers 10x more than general social media advertising overall.
Acclaimed AI
After a year of ongoing interest in AI, traffic to retail sites from AI-powered chatbots has doubled. Direct referrals (consumers clicking on a link to a retail site) have also increased dramatically—eight times higher than in 2023. The use of generative AI tools is estimated to rise for the holiday season, with Adobe reporting that 7 in 10 consumers who have used the technology for shopping believe it has enhanced their experiences, leading to 2 in 5 consumers planning to utilize the services for holiday shopping. Additionally, 20% of respondents turn to generative AI to find the best deals, followed by quickly finding specific items online (19%) and getting brand recommendations (15%).
Hacking the Holidays
With the countdown to big holiday dates well underway, brands should be preparing to capitalize on consumer spending based on predictions and previous shopping trends. The upcoming season provides a critical opportunity for growth across the beauty industry as discounts, BNPL, influencers, and AI all sway customer choices. As brands prepare for the influx of salesduring the holiday months, it is worth remembering that such a vital period for boosting revenue could set the tone for success in the upcoming year.
