New Salesforce research reveals a significant rise in consumer credit usage, with 37% of indebted consumers using their credit cards more frequently than a year ago, and 32% increasingly turning to alternative credit services like “buy now, pay later.” Additionally, 43% of consumers report carrying more debt compared to 2023, a trend seen across all income brackets. This uptick in credit usage does not stem from increased purchasing. In fact, the Salesforce Shopping Index shows that online order volumes have been declining since 2022, with a 2% year-over-year decrease in the first quarter of 2024. When consumers do buy, they are opting for discounted merchandise and private labels.
Prediction 1: Chinese Shopping Apps Will Capture Market Share
As consumers grapple with rising prices, their shopping habits are shifting. Price sensitivity now trumps the fast shipping times that dominated the pandemic era. Two-thirds of global shoppers prioritize price over quality when choosing where to shop. Temu leads the pack, with 43% of Western shoppers having purchased on the platform in the last six months. For Gen Z, Shein is the top destination, with half of this demographic placing recent orders. This holiday season, it is predicted that Chinese shopping apps will seize $160 billion in global e-commerce market share outside of China.
Prediction 2: Middle-Mile Shipping Costs Will Strain Margins
Global shipping costs are rising due to factors such as the Houthi attacks in the Red Sea and increased crude oil prices. These issues, coupled with last-mile challenges like the collapse of the Francis Scott Key Bridge and rising delivery costs, are straining middle-mile infrastructure. Despite these challenges, retailers should not transfer shipping expenses to consumers. Free shipping remains a top reason why consumers choose to purchase from a particular brand or retailer, with over half of shoppers more likely to buy online if delivery is free. This holiday season, brands and retailers are expected to spend an additional $197 billion on middle-mile expenses, a 97% increase from last year.
Prediction 3: Shoppers Will Embrace AI for Gift Searches
Last holiday season, 17% of online purchases were influenced by AI, amounting to $199 million in global online sales in November and December. This year, consumers are expected to increasingly use AI, both predictive and generative, to find the perfect gift at the best price. According to a survey, 53% of shoppers are interested in using generative AI for gift inspiration. As retailers embed AI into search experiences, it is predicted that AI-driven search will achieve nearly three times the conversion rate compared to non-AI search traffic.
Prediction 4: Black Friday Will Become Cyber Friday
The trend of early holiday shopping continues, with consumers starting their purchases earlier in November. Last year, Black Friday regained 4% of online holiday sales, reaffirming its status as the biggest online shopping day of the year. This pattern is expected to continue, with two-thirds of shoppers holding off on major purchases until Cyber Week in anticipation of better deals. Notably, Salesforce research predicts that online sales will capture 7% of in-store sales on Black Friday.
Prediction 5: Retailers Will Focus on Loyal Shoppers
Amid rising digital marketing costs due to busy election cycles and increased competition from Chinese companies, brands and retailers are turning to their existing customer base. Customer acquisition remains expensive, making it crucial for retailers to engage their loyal shoppers. The Salesforce Shopping Index reports an 8% increase in repeat buyers over the past two years. Loyalty programs are key, with 63% of shoppers making more purchases at stores where they can earn and redeem points. This holiday season, it is predicted that two out of five holiday purchases will be made by loyal repeat buyers.