By Patti Murphy
It doesn't matter which predictions you turn to; all indicators point to healthy consumer spending for the winter holiday season. The National Retail Federation forecasted that winter holiday spending will grow between 2.5 percent and 3.5 percent over 2023. That equates to between $979.5 billion and $989 billion in total consumer spending between Nov. 1 and Dec. 31, 2024.
"The economy remains fundamentally healthy and continues to maintain its momentum heading into the final months of the year," said Matthew Shay, NRF president and CEO. "The winter holidays are an important tradition to American families, and their capacity to spend will continue to be supported by a strong job market and wage growth."
Mastercard Economics Institute forecasted a 3.2 percent increase, excluding automotive sales, in total U.S. spending from Nov. 1 to Dec. 24, compared to 2023, when holiday sales rose 3.1 percent. ACI Worldwide, meanwhile, predicted that holiday spending worldwide will rise 16 percent in value from Oct. 1 through Dec. 21, compared to the same period last year.
Here in the United States, a primary contributor to overall retail sales growth is expected to be online shopping, the NRF said. Online and other non-store sales, which are included in NRF's predicted sales total, are expected to increase between 8 percent and 9 percent to total between $295.1 billion and $297.9 billion.
That's up from $273.3 billion in online and other non-brick-and-mortar sales last year. By way of comparison, non-store sales last year rose 10.7 percent over 2022.
Adobe Analytics predicted somewhat lower online sales, although it still expects record spend. U.S. online sales will hit $240.8 billion this holiday shopping season, Adobe said, representing 8.4 percent growth year-over-year. In the 2023 year-end shopping season, consumers spent $221.8 billion online, which worked out to 4.9 percent YoY growth.
Shopping on mobile devices is expected to hit a new milestone, contributing a record $128.1 billion to total spending and growing 12.8 percent YoY. This would represent a 53.2 percent share of online spending this season (versus desktop shopping), Adobe said.
During the 2021 holiday season, 43 percent of online sales were driven by mobile devices, a modest increase from the year prior which was 40 percent. In the years since, consumer demand for speed and convenience, combined with improved mobile shopping experiences, has driven a steady uptick in mobile usage, Adobe said.
Cyber Week—the five-day period including Thanksgiving, Black Friday and Cyber Monday—is expected to drive $40.6 billion to the online spend total, up 7.0 percent YoY and representing 16.9 percent of overall holiday season spending, according to Adobe's predictions.
Adobe expects Cyber Monday to remain the season's and the year's biggest shopping day, driving a record $13.2 billion in spend, up 6.1 percent YoY. But Black Friday (with a predicted $10.8 billion in spend, up 9.9 percent YoY) and Thanksgiving Day ($6.1 billion, up 8.7 percent YoY) are both expected to outpace Cyber Monday in growth, as consumers embrace earlier sales promotions.
In a survey of 5,000 consumers fielded by Adobe in September 2024, 71 percent said they planned to shop online on Black Friday, with 70 percent saying they proactively check for deals during Cyber Week.
Shay said retailers don't expect shoppers to confine themselves to one channel of shopping. "Consumers aren't compartmentalizing their shopping. We expect robust activity across channels."
ACI's survey results echoed this sentiment. The global payments company observed that omnichannel retailers hold a competitive advantage, as convenience-oriented consumers spend 70 percent more when choosing click and collect or buy online pickup in store. "Consumers' shopping journeys are evolving with more channels, hybrid services and diverse payment options," said Bobby Koscheski, head of merchant at ACI.
"The holiday shopping season has been reshaped in recent years, where consumers are making purchases earlier, driven by a stream of discounts that has allowed shoppers to manage their budgets in different ways," said Vivek Pandya, lead analyst for Adobe Digital Insights.
"These discounting patterns are driving material changes in shopping behavior, with certain consumers now trading up to goods that were previously higher priced and propelling growth for U.S. retailers," Pandya added.
"Holiday creep," a phenomenon whereby retailers stock holiday merchandise earlier each year, has driven a shift in consumer preferences. "We're seeing consumers shift their buying and sustainability habits when it comes to their holiday shopping," said Carson Kind, director of global alliances at Project44, an integration platform for freight companies. "Shopping for gifts before peak season can help shoppers save money, lower carbon emissions and limit delayed shipping headaches."
Fifty-eight percent of consumers surveyed by Project44 said they were unlikely to shop at a retailer that missed a past delivery date. "Retailers are starting promotions earlier than ever," said Shay, adding that this can help cut down on shipping delays.
Consumers started seeing deals beginning in October, with Amazon's Prime Day event, which drove discounting across major U.S. retailers, Adobe said. Adobe added that discounts will ramp up again beginning Nov. 1, and Cyber Week discounts are likely to linger through the month of December.
"We're seeing broader promotional activity than last year," Shay said. "We're seeing retailers cutting prices on thousands of items and SKUs across entire stores." He pointed out that these price cuts are being made broadly across more categories than in years past.
Adobe said it also anticipates major discounts this season—up to 30 percent off list prices—as retailers compete for consumer dollars. Of 18 categories tracked by Adobe, discounts for electronics are expected to peak at 30 percent off list prices, while discounts for toys are set to hit 27 percent.
Record high discounts are also expected for televisions (24 percent), apparel (23 percent), computers (23 percent), furniture (19 percent), appliances (18 percent) and sporting goods (18 percent).
Buy now, pay later (BNPL) deals are expected to set new records this season, after already setting records in the first half of 2024, when global BNPL transactions skyrocketed by an astounding 237 percent, nearly tripling in volume, according to ACI. "We're seeing a meteoric rise in buy now, pay later," Amanda Mickleburgh, a product director at ACI, said in a recent webinar.
Adobe expects BNPL to drive $18.5 billion in online sales, up 11.4 percent YoY. In November alone, BNPL purchases will reach $9.5 billion, Adobe predicted. Cyber Monday, which falls on Dec. 2, is expected to be the largest single day for BNPL, with an expected record of $993 million in sales.
BNPL will be driven predominantly by mobile shopping, with its share of spend expected to hit a staggering 74 percent to 79 percent, Adobe said.
Also, according to Statista Consumer Insights, millennials stand out as the nation's BNPL generation. In Adobe's survey, 39 percent of millennials said they planned to use the payment plan this winter shopping season. Generation Z consumers aren't far behind, with 38 percent of those surveyed planning to use BNPL.
The most common reasons given for using BNPL, Adobe said, include freeing up cash and the ability to purchase something they otherwise could not afford.
Generative artificial intelligence-powered chatbots have had a dramatic impact on traffic to retail ecommerce sites this year. And use of generative AI tools for shopping is expected to rise this holiday season. "This is the first holiday season retailers have been able to employ generative AI to serve customers in effective ways," noted the NRF's Shay.
Generative AI is a form of AI that can understand plain language prompts or questions and respond with text or images. It is said to help retailers better understand customers based on order histories so they can serve up helpful suggestions.
Adobe's survey found that seven in 10 consumers who have used generative AI for shopping believe it enhances their experience, and two in five plan to use it for the holidays. Additionally, 20 percent of those surveyed said they use AI to find the best deals and specific items online. But there is a downside to AI. AI-driven bots and scripts have become tools that allow fraudsters to generate synthetic identities on a massive scale. Synthetic ID fraud (where genuine information is merged with fabricated information to create new synthetic identities used to open accounts and make fraudulent purchases) has become a revenue-draining threat for merchants and acquirers, ACI said in a report.
The average value for this type of attack is nine times more than other common types of payments fraud, ACI said, adding that merchants and their acquirers can counter this trend by tightening their fraud strategies through the use of AI-based fraud tools to help spot fakes.
But in a webinar, ACI fraud experts counseled that AI tools alone will not be enough. "AI is dependent on the data that is put into [the models] to generate the best responses," Mickleburgh said. "Human intelligence is as important as artificial intelligence." She characterized AI as a "time saver" for reviewing vast reams of data. "AI models need to be built and augmented by humans." Using data "smartly" results in less friction for consumers, she added. 
Patti Murphy, self-described payments maven of the fourth estate, is senior editor at the Green Sheet. She also co-hosts the Merchant Sales Podcast, and is president of ProScribes Ink.
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