The growth of ecommerce sales coming out of the 2020 pandemic contributed to the fastest retail spend growth rate in 20 years, reaching upwards of 16% in 2021. This increase in spend was shown most profitable during the 2021 holiday season, with Black Friday sales growing 3% to hit $10.9 billion, and Thanksgiving sales growing 2.3% to $5.17 billion YoY. Current inflation rates and shopping behavior changes have left many companies with bloated inventories, impacting plans for Q4. Target announced in June 2022 that they are moving aggressively to rid themselves of excess inventory, canceling orders and offering discounts to adapt to changing consumer spending habits. As reported in The Wall Street Journal, S&P 500 companies were sitting on roughly $1.1 trillion in inventory in Q1, up 16% YoY according to data from S&P Global Market Intelligence. Although inflation rates have impacted ecommerce shopping patterns in 2022, analysts at emarketer are still forecasting a 15.5% increase in ecommerce sales during the 2022 holiday season. According to their data, brands should still expect highly competitive Black Friday and Cyber Monday sales.
How will this year’s recession impact holiday shopping trends? With recent market volatility, analysts at eMarketer have predicted a growth of Buy Now Pay Later (BNPL) transactions with Klarna, Afterpay, and Affirm, all of which are expected to hit new records midst-recession. “Growth in BNPL payment value will continue in the double digits through to 2026, albeit without the dramatic spike it saw this year. In fact, Insider Intelligence estimates that over $142 billion will be transacted on BNPL platforms in 2026 by over 104.6 million US consumers.”
In addition to BNPL options, PayPal and Apple Pay have shown major increases in preferred transaction payment types, with 44% of adults preferring one or the other when shopping online. Major credit cards like Discover are also offering cash back promotions in Q3 and Q4, creating a larger incentive for users to implement BNPL payments.
With the rise of BNPL, Apple Pay, and PayPal transactions nationwide, brands are encouraged to implement these partners as a payment method for all consumers this shopping season. From a promotional standpoint, The Wall Street Journal has encouraged brands to extend all holiday promotions to a minimum of seven days and a maximum of fourteen days, giving online shoppers more time to analyze promotions and savings with the current economic state. Data analysts have reported peak shopping activity occurring earlier in November in the past three years, indicating another early shopping year in 2022.. Brands participating in Q4 promotions have stated that they are beginning to execute holiday planning, conduct competitor research, and ensure inventory volume remains consistent with last year’s purchasing trends as a high ecomm shopping season is expected in these months to come.