Salesforce has released data from its Shopping Index early holiday indicators (Oct. 1–Nov. 14). The data provides a snapshot of consumer behaviour in the run-up to the holiday season. Salesforce will update shopping figures during cyberweek.
- Online traffic remained elevated ahead of Cyber Week: Digital traffic was up 3% for the US. It was up 1% globally year over year (YoY) as consumers began their hunt for holiday gifts.
- Soft online sales in the early shopping season sets up a big Cyber Week for retailers: While consumers started their browsing early, digital commerce revenue was flat in the US and down 7% globally YoY.
- Rising prices put shoppers on edge: Average Selling Price (ASP) rose 14% in the US and 8% globally compared to 2020. Even with discounts, consumers are still paying more than they did two years ago.
- Discounts and digital marketing softened after October Prime event:
– Discount rates dropped by 16% in the US. 6% globally for the following four weeks, on average, after Prime Day 2022. This was also 11% lower in the US and globally compared to 2019 during the same period.
– Email and mobile marketing messages decreased by 5% globally the week after Prime Day. Retailers holding promotions steady given continued margin pressure. - Some sectors offer bigger, better early deals: The highest discounts were found in:
– Home Appliances (26%)
– General, Handbags, and Luggage (24%)
– General, Apparel (22%)
– Beauty, Makeup and Beauty, Skincare (21%) - Automation is playing a key role for retailers: Customer service chatbot sessions increased 44% YoY.
The Salesforce perspective:
“Retailers are falling back into the trap of ‘discount chicken,’ where they execute earlier promotions to drum up demand, only to have consumers wait for that last and biggest deal during Cyber Week,” said Rob Garf, VP and GM of Retail, Salesforce.
“Early season online traffic was strong, but online sales were soft. This means while consumers browsed online early in the season, they didn’t buy. Softer online sales indicate that they are waiting for bigger deals. Or going into physical stores to buy their holiday gifts,” he continued.
Salesforce’s Cyber Week 2022 predictions:
Reviewing early season data, Salesforce expects to see four major trends driving the biggest holiday season shopping rush:
- A sluggish start will equate to a bigger-than-expected Cyber Week.
- Cyber Week will have the highest concentration of holiday purchases. While shopping has increasingly spread out across November over the last several years. Price conscious shoppers are holding onto their wallets in anticipation of Cyber Week this year.
- Discounts will deliver value to consumers and free up retailer inventory and shelf space.
- Global average discount rates will likely reach 25% during Cyber Week 2022. This would be a 12% increase compared to 2021, when retailers had strong demand and inventory scarcity.
- The biggest jump in discounts during Cyber Week will come in three categories.
- Luxury handbags (3X increase)
- General apparel (2X increase)
- Skincare and makeup (2X increase)
- In addition, the best day to buy toys and electronics will likely be on Cyber Monday, and the best days to buy apparel and sporting goods will likely be Thanksgiving and Black Friday.
- Buy Online Pickup In Store (BOPIS) will deliver immediate satisfaction from gift purchases. Retailers will see a 1.5x–2x surge in BOPIS and curbside pickup orders placed on Thanksgiving and Black Friday morning as shoppers look to avoid lines and snag early promotions. Share of BOPIS orders doubled in the last four days before Halloween and peaked on October 30. As shipping cutoffs for major holidays approach, this consumer behaviour is expected to continue.
- Chatbot and automated service usage will skyrocket. As companies focus on cutting costs and saving agent time for complex customer service requests during Cyber Week. Chatbot usage will grow at 43% year over year.
Enterprise Times: What this means for business.
Times are hard on the high street and cyber avenue. For consumers, there might be fewer gifts to wrap this holiday season. This will be due to increased prices (inflation), rising interest rates, and lowered consumer confidence. As a result, brands and retailers will have to work even harder to attract and engage consumers. From loyalty programmes to personalised recommendations to unique store experiences, retailers will need to pull out all the stops to grab price-conscious Cyber Week shoppers’ attention. At the same time they still have to balancing cost and margin pressure. New data from Salesforce suggests retailers pulled back from deep discounts to preserve margins going into Cyber Week. Furthermore, shoppers noticed and spending slowed. Retailers need to consider how they engage with consumers in the run-up to Black Friday and the holiday season.
