Keep Your Loyal Customers Closer: 5 Holiday Shopping Predictions

It’s the most wonderful time of the retail year: You’re gearing up for another competitive holiday shopping season. While 2022 swirled around driving profitability in the face of a challenging economy, our holiday shopping predictions show that 2023 is all about keeping loyal customers happy. For retailers, finding new customers is getting more expensive while marketing budgets are shrinking. And since existing customers drive most of your revenue, keeping them satisfied should be your top priority. 

Customer loyalty changed rapidly over the last few years. In 2020, safety and fast delivery kept consumers coming back. In 2021, consumers relied on the retailers who had the products they needed in stock. Last year, they switched brands for lower prices, and this year consumer preferences continue to evolve. 

Unfortunately, consumer sentiment is still low in most countries around the globe. According to Salesforce research, approximately half of consumers worldwide feel pessimistic about the economy while only 29% feel optimistic. 

But these same consumers feel better about their own finances, with two-thirds saying their financial situations have either remained the same or improved. That’s because they’ve been saving more to prepare for an economic downturn. Their buying habits have changed, too, with 37% saying they’re buying less than they were six months ago compared to just 18% who say they’re buying more.

With shoppers buying less, retailers must give discerning consumers a reason to shop with them. While pricing and value are still important – with 82% of shoppers searching for coupon codes before making a purchase –  engaging with loyal customers is critical. 

Here’s the good news: Shopper loyalty is on the rise. According to Q1 Shopping Index data, the share of orders from repeat buyers grew 5% year over year. In fact, we expect over one in three online holiday orders will come from repeat buyers this holiday shopping season.

Again this year, retailers are keeping an eye on margins, looking for ways to save on costs while boosting revenue. Our 2023 holiday shopping predictions show retailers using AI, customer data, and automation to drive costs down and loyalty up. Successful companies will focus on building stronger relationships – and increasing share of wallet – with existing customers to unlock additional revenue streams.

Prediction #1: Generative and predictive AI  will influence digital sales

The buzz around GPT and other generative AI models dominates the headlines this year, and the tools are going mainstream. According to Salesforce research, 17% of consumers have used GPT for product research and inspiration, and 10% say they’ll likely use GPT to help them build out their holiday shopping lists. 

But predictive AI already has played a critical role in the online shopping experience. AI-generated product recommendations have been used by ecommerce merchants and digital marketers for years to offer consumers ideas and suggestions – from the homepage to the product page to the shopping cart and beyond. Now, with the rise of generative AI – which uses human prompts, algorithms, and data to create new and original content like text, images, music and more – we expect retailers to further personalise the shopping experience. 

Brands and retailers will embrace this technology over the holiday season to deliver a better shopping experience more quickly to their customers, specifically in:

• Marketing: Automating marketing campaigns and drafting content for emails, landing pages, text messages, social media, and apps
• Commerce: Offering conversational site search for a more human and natural way to find the perfect gift across digital touchpoints
• Service: Creating more nuanced chatbot responses that can deeply understand, anticipate, and respond to questions

Our prediction: As consumers continue to engage with marketing, buying, and service experiences generated by artificial intelligence, both generative and predictive artificial intelligence will influence $194 billion in global online holiday shopping spend.

Prediction #2: Poor returns experiences will cost sales

Efficiently managing returns and reducing their frequency has become a top priority for retailers. During the holiday shopping season last year, there was a significant 12% increase in the rate of shoppers returning products. As returns surged, brands and retailers looked to rein in historically liberal policies to stem the flood of returned merchandise. 

But so far their efforts have largely focused on restrictions rather than an experience that balances customer satisfaction and operational efficiency. This led to the share of online order returns increasing 11% in the first quarter of this year.

Our research shows that the returns experience significantly impacts buying decisions and, if not executed properly, could lead to loyal shoppers abandoning retailers and brands. Returns must be:

• Clear: 93% of shoppers report they research a brand or retailer’s return policy before making a purchase.
• Easy: 81% of shoppers report they’ve stopped purchasing from a brand or retailer after one bad return experience.
• Reasonable: 78% of shoppers report they have abandoned a shopping cart if free returns weren’t available. 30% said getting a refund instead of store credit tipped the scales of where and when they purchased. 

In our uncertain economy, shoppers will continue to shop more deliberately. And that may mean even more returns – and the potential to retain or lose loyal customers. 

Our prediction: Poor returns experiences – from policies and processes – will put 21% of online orders at risk.

Prediction #3: BOPIS will drive incremental store purchases

Buy-online-pickup-in-store (BOPIS) options gained popularity in 2020 and have remained essential for shoppers. Salesforce research shows BOPIS influences people to consider a particular retailer, with 39% of shoppers saying they seek out retailers who offer it.

It can help sales, too, since 41% of shoppers say they’re more likely than a year ago to buy after browsing online for inventory available in physical locations. This omnichannel buying behaviour shows consumers still seek out visibility and convenience. During the 2022 holiday shopping season, BOPIS drove one in five online orders, with its influence surging to over one in three after the shipping cut-off dates. 

But BOPIS is complex to execute. Operational rigor is required within the store – with new training, processes, metrics, and incentives – to scale this profitably. And tools and solutions that enable seamless execution are critical to balance smooth execution, high customer satisfaction, and positive associate morale. Those retailers looking to scale quickly for the holiday have turned to outsourced solutions, like Walmart’s Store Assist and Salesforce partner GoLocal, that streamline last-mile operations. 

Our research shows BOPIS generates value for the brand and retailer: Companies offering BOPIS grew their online revenue seven times faster than brick-and-mortar stores that didn’t offer the option. But this year, we believe the value of BOPIS won’t be limited to increases in online sales. 

Our prediction: BOPIS will drive $28 billion in incremental global store sales when customers pick up their online orders.

Prediction #4: Social media ads will deliver the best ROI

Social media’s role in the shopper journey is growing. In the first quarter, traffic referrals from social media platforms grew 27% year over year even as the shopping journey becomes more complex and fragmented across multiple channels. But our research shows social media’s influence reaching beyond the digital landscape to in-store behaviour. In the past three months, more than half of consumers said they went to a physical store to see or buy products they discovered on their social feeds. 

How are shoppers engaging with products on social media? For many years influencer marketing drove sales, but recent studies have suggested its impact is waning, replaced in efficacy by social advertising. Our research shows shoppers are nearly twice as likely to purchase a product if it was advertised in their social feeds than if they saw an influencer promote a product. 

We also see social media advertising may be more effective than traditional marketing tactics. For example, 50% of shoppers say they’re more likely to visit a brand or retailer’s website after seeing a social media ad compared to just 39% of shoppers who receive a promotional email. Brands and retailers must embed themselves in the channels their customers use and trust to generate holiday inspiration at just the right moment.

Our prediction: Social media advertising will drive 10 times more online holiday shopping visits than traditional marketing.

Prediction #5: Consumers embrace the resale market to save money – and the planet

The resale market has been a fan favourite since the dawn of the internet age. Anyone with an eBay account could buy and sell used goods across the U.S. and now across the globe, paving the way for today’s online marketplaces like Facebook Marketplace, ThredUp, and The RealReal. Even Goodwill is getting into the game by moving online with GoodwillFinds.com, which lets its network of independent organisations reach customers beyond brick-and-mortar stores. 

Now brands and retailers are reselling their used merchandise on their websites to claim a share of a market seeing incredible growth. For example, Coach’s website includes a category for “recycled” bags, products previously owned that were deconstructed and redesigned into one-of-a-kind items. This new and creative offering gives loyal customers reason to return to the site, which may lead to additional purchases.

Why are consumers gravitating towards resold goods? Our research shows they want to save money, be more sustainable, and get products faster than some new products’ delivery times. Nearly half of consumers say they will buy a used item for themselves in the next six months.

Our prediction: 17% of items gifted this holiday will be a resold item, saving 32 billion pounds of additional waste in landfills.

What our holiday shopping predictions mean for you

Customer retention comes down to knowing your customers. Understanding their needs, preferences, profile, and history is the first step in building a successful holiday strategy. Begin with what you have – your customer data – and use tools like artificial intelligence and automation to meet them at exactly the right moment. That’s how you create magical customer experiences that keep shoppers loyal at peak holiday moments and throughout the retail year.