Holiday cheer has come early for U.S. retailers. The National Retail Federation (NRF) said that holiday season spending is expected to range between $979.5 billion and $989 billion, up from $955.6 billion last year. Experts believe that retailers who adapt quickly to consumer expectations will do particularly well despite five fewer shopping days between Thanksgiving and Christmas than in 2023, inflation, supply chain disruptions and other global macroeconomic factors.
“It all comes down to nurturing the personal relationship that consumers share with your brand,” said Brandon Rael, Director and Consult Partner at Kyndryl. “That’s why creating frictionless shopping experiences matters more than ever.”
Here, Rael recommends four ways retailers can make the most of the year-end shopping surge.
1. Stretch conventional holiday timeframes
Consumers started their holiday shopping as early as October this year. Such an early start allows retailers to stay ahead of the curve by offering timely deals and promotions, and nimbly adapting their sales strategies for Black Friday, Cyber Monday and Christmas. Retailers also have a chance to prepare for post-holiday returns so that the process is as frictionless as possible for their customers.
How retailers can flex this opportunity
Augmented Reality (AR) and Virtual Reality (VR) for virtual try-ons can create an immersive and interactive shopping experience for consumers while helping to reduce return rates. Additionally, by using AI-enabled checkout systems, brick-and-mortar stores are better positioned to manage surges in customer volumes while reducing retail theft.
2. Don’t underestimate baby boomers
Contrary to popular belief, older consumer segments can be tech-savvy and adaptive to digital shopping on mobile devices. They are increasingly familiar with touchless commerce and know how to use loyalty programs. Meanwhile, younger shoppers — nearly 54% of Gen Z shoppers and 45% of millennials — often use social media platforms for holiday shopping, making those channels crucial to product discovery and purchasing.
How retailers can flex this opportunity
Applying AI to data analytics to help understand different customer segments can empower retailers to customize their messaging and promotional strategies to resonate more effectively with different generations. Retailers should invest in data analytics tools that enable them to anticipate demand trends, optimize pricing strategies and personalize marketing efforts. To attract a wider cross-section of buyers, retailers may also need to offer more convenient and flexible payment options, such as buy now, pay later.
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It all comes down to nurturing the personal relationship that consumers share with your brand. That’s why creating frictionless shopping experiences matters more than ever.
3. The future
is ‘phygital’
Brands want to remain top-of-mind for consumers. So, while the concept of “phygital” (providing complementary online and in-person shopping options to enhance customer engagement) is not new, retailers must sharpen their abilities to seamlessly integrate digital, mobile and in-store experiences. They will also need to drive interactions across multiple digital touchpoints — including websites and social media platforms — in ways that make it easier for customers to access products and related services.
How retailers can flex this opportunity
According to Kyndryl’s 2024 Readiness Report, only 7% of IT incidents in retail are resolved by automation, offering these businesses more room to run — especially during the holidays. Unified inventory systems, click-and-collect services and consistent cross-channel promotions can significantly enhance shoppers’ convenience. Additionally, AI chatbots and virtual assistants can help deliver quick responses to increases in customer inquiries during the holiday season. Finally, retailers can benefit from real-time inventory tracking capabilities to help ensure product availability and optimize last-mile delivery.
4. Humanize
your brand
In our “attention economy,” engaging an audience in an authentic and human way is critical to success. Retailers must extend their brand storytelling to third-party endorsements and influencer engagements to effectively connect with different generations of consumers. Modern consumers are particularly interested in the sustainability and fair production practices behind their purchases, urging retailers to invest in sustainable practices, such as eco-friendly packaging and carbon-neutral shipping options.
How retailers can flex this opportunity
AI-driven personalization can help retailers boost brand loyalty by providing relevant information on their sustainable practices with trust and transparency to environmentally conscious consumers.
