US Consumers are displaying a dramatic determination to get more for their money this holiday season. They are relying more heavily on discounts and trading down for lower-priced items, according to early seasonal data from commerce protection provider Signifyd.
US eCommerce sales for the first two weeks of October were up 3% over a year ago. But whether retailers were cheering or reassessing their holiday strategies was highly dependent on their retail category, according to Signifyd’s Holiday Season Pulse Tracker. Throughout the holiday season, the newly launched Pulse Tracker will provide updated data on holiday online sales by vertical, order value figures and fraud trends, including first-party fraud.
The latest Ecommerce Pulse numbers were good news for online merchants. On top of October’s sales boost, US eCommerce sales increased 8% in September over the same month a year ago. Online shoppers last month also placed more orders of slightly lesser value than in September 2023, according to Signifyd. Taken together the numbers show that consumers are ready to spend — but again only when the price is right.
Signifyd’s eCommerce Pulse report key findings
- Holiday eCommerce sales for the first two weeks of October were up 3% over a year ago. Grocery and apparel led the way, and electronics saw a notable decline in year-over-year sales.
- Discount use in early October was up by 22% over last year. A sign that shoppers would stick with their value-focused shopping this holiday season.
- September eCommerce sales finished up 8% over September 2023, with exceptionally strong luxury goods sales and disappointing numbers for electronics.
Finding the balance between promotions and profits
The early indications point to the importance of discounts this holiday season. This leaves retailers balancing the need to be competitive on price while preserving margins during the most crucial sales period of the year.
During the first two weeks of October, 32% of online sales were accompanied by a discount code, Signifyd data showed. That marked a 22% increase over the first two weeks of October 2023.
“It’s no surprise that we continue to see consumers hunting for bargains as the holiday shopping season begins. That said, the growth in discount code usage is pretty dramatic,” said Signifyd Senior Data Analyst Phelim Killough. “Retailers can expect shoppers to be value-oriented throughout the holiday season, looking for deals and trading-down for less expensive items.”
The importance of discounts this holiday season
The report suggests the significant increase in shoppers’ use of discounts tells two stories. Consumers are focused on finding promotions and merchants understand they need to offer enticements to make sales.
September’s strong sales month also saw consumers looking for good values. The average online order value during the month dropped 1% compared to a year ago. In addition, the number of items in each order increased by 13%. That means consumers spent more on less expensive orders and on less expensive products in each order.
Grocery category led the sales growth in September, as it has for months, finishing up 32% compared to September 2023. Luxury goods also had a strong showing. This was something of a surprise given the bite that essential spending is taking out of consumers’ budgets.
Even fans looking for luxury are keeping an eye on prices
But Killough noted the increase in luxury spending was spurred by high average order values — up 18% year over year. This was driven by orders containing more items than last September’s orders. Those trends indicate that even when it comes to luxury, consumers are focused on value. Killough suggests they are opting for quantity over high-priced goods.
On the losing side of the September ledger, the electronics category saw online sales fall 9% compared to last year. It’s possible consumers were holding off until the holiday season to make their electronic purchases.
While it’s too early in the holiday season — which Signifyd defines as October through December — to draw firm conclusions. Killough pointed out the electronics category saw something of a turnaround between the first and second weeks of October. During the first week, online electronics sales fell 25% compared to the first week of October 2023. During week two, the year-over-year sales decline had fallen to 5%.
Enterprise Times: What this means for businesses
The story of US shoppers continuing to demonstrate a determination to fulfil holiday wishes is not a new trend. The key headline in this data is that consumers are value-focused during the first weeks of online holiday shopping. They are embracing retailers’ promotions and searching for lower-priced goods. The Categories off to a fast start this holiday season include grocery, up 24% during the first two weeks of October. Apparel, up 8%, compared to the first two weeks of October 2023.
What is interesting about the data is what is fails to discuss. Many retailers are beginning to experiment with AI-led strategies for delivering exceptional product discovery experiences and promotions. Last year, Coveo’s retail executive holiday study found 84% of retailers felt that consumers can get deals anytime they want.
Consumers are currently planning to take advantage of holiday shopping peaks with electronics, fashion and apparel. Digital offers and discounts remain supreme for most shoppers. Many discover special offers via purely digital sources, including email, social media platforms, online search, and online marketplaces. This is where AI comes into play. Retailers and brands who can incorporate AI into their retail strategy are likely to thrive in this holiday season and beyond. An area that this report fails to address.
