Key takeaways

  • Factors including ongoing inflation, high interest rates and diminishing excess savings are pressurizing consumer confidence this holiday shopping season.
  • To entice value-driven consumers, brands and retailers are running early promotional cycles, though the magnitude of discounting has eased relative to 2022.
  • More consumers are choosing to shop online, with e-commerce holiday sales projected to grow +8.5% year-over-year.

The festive spirit is in the air, but consumers may not be willing to splurge just yet. Amid a backdrop of high inflation and dwindling excess savings, what’s the retail outlook this holiday shopping season? 

Retail trends shaping holiday shopping

“With 32 days between Thanksgiving and Christmas, 2023 marks the longest holiday shopping season since 2018. In our view, key themes this year include continued macro headwinds, discounting and earlier promotional cycles, fast delivery speeds and rationalized holiday hiring,” said J.P. Morgan’s Head of U.S. Internet, Doug Anmuth, who covers e-commerce companies including Amazon. Find out more about these trends below. 

What are the retail trends shaping the holiday shopping season?


Factors including ongoing inflation, high interest rates and diminishing excess savings are pressuring consumer confidence this festive season. 


Value remains paramount, but gifting is also a key driver, with consumers cutting back on self-purchasing to spend on loved ones. 


Brands and retailers are running early promotional cycles and improving delivery speeds to boost sales. 


Overall, e-commerce is outperforming brick-to-mortar traffic. J.P. Morgan Research expects online holiday sales to grow +8.5% year-over-year. 


Consumers remain value-driven this holiday season

In the U.S., ongoing inflation, high interest rates, diminishing excess savings and the return of student loan payments are pressurizing consumer confidence and spending this holiday shopping season. 

“Value remains paramount to consumers’ spending decisions this holiday,” noted Matthew Boss, Head of Department Stores, Specialty Softlines and Leisure at J.P. Morgan. “This has amplified the importance of the recent Black Friday weekend, as consumers shopped across channels to find the best deals and promotions in light of an uncertain macroeconomic backdrop.” 

Despite tight purse strings, gifting was a key driver of sales in the U.S. over the Black Friday weekend, with consumers willing to cut back on self-purchasing in order to spend on loved ones. “To that point, our work highlights ‘trade-up’ behavior notably across soft goods categories, as consumers looked to provide more attractive gifts for others,” Boss said. 

Over in the U.K., consumers continue to be selective about spending. “Recently, e-commerce association IMRG commented that of the 80 retailers it surveyed on November 16, 50% said that trading so far was below expectations,” said Georgina Johanan, Head of European General Retail at J.P. Morgan. “Similarly, the broad tone from the British Retail Consortium (BRC) was cautious, although we would note that this has been the case throughout the year. Sales across most of our U.K. coverage have continued to show resilience and, in many cases, strength.” Overall, according to BRC data, non-food sales in the U.K. was -1.6% year-over-year in the three months to November.

Consumer confidence is low in the UK 

Line chart depicting U.K. consumer confidence, which deteriorated by nine points month-over-month in October 2023.

Early promotions support holiday shopping

To entice consumers, brands and retailers are running early promotional cycles this holiday shopping season. “Early promotional cycles drive increased demand as consumers seek to efficiently spend and value-hunt. However, while markdowns persist this holiday season, we believe the magnitude of discounting has eased relative to 2022, given normalized supply chains and inventories,” Anmuth said. 

These views are echoed by Boss, who noted that inventories are down 8% on average exiting the third quarter. “We see a cleaner inventory backdrop going into the holiday season, with management teams prudently planning for competitive promotions as macro-related headwinds continue to drive a price-sensitive consumer,” Boss said.  

This trend is also playing out in the U.K where, out of 295 companies surveyed by IMRG, 45 went live with offers three weeks before Black Friday. “Looking at year-over-year performance, discounts were higher across the board for almost all clothing retailers in our coverage,” Johanan added. 

“We see a cleaner inventory backdrop going into the holiday season, with management teams prudently planning for competitive promotions as macro-related headwinds continue to drive a price-sensitive consumer.”

E-commerce is king in terms of retail spending

More consumers are choosing to shop online this holiday season. “In a return to pre-pandemic trends, our checks cited outperformance of e-commerce sales relative to brick-and-mortar traffic,” Boss said. This is reflected in Chase credit card data, which indicates that card-not-present spending in the U.S. around Black Friday was at its highest since 2020. 

US consumers are spending more online 

Line chart depicting Chase card-not-present spending around Black Friday, with 2023 data trending above previous years’.

“This year, we’re expecting solid online holiday sales growth of +8.5% year-over-year, above last year’s +7% year-over-year,” Anmuth said. “Overall, we project U.S. e-commerce penetration at 23.4% of adjusted retail sales this holiday season — an increase of 90 basis points from the 22.5% we saw in 2022.” 

Improved fulfilment infrastructure streamlines holiday shopping

As the holiday shopping season is crucial for e-commerce businesses, several brands and retailers are taking steps to improve their fulfilment infrastructure. 

“This year, both omni-channel and pure online retailers are focused on faster delivery speeds to drive purchase consideration and frequency,” Anmuth said. For instance, Amazon is on track to deliver its fastest delivery speeds for Prime members in its 29-year history. The company is also offering free shipping on a higher number of items this season. 

In addition, retailers are broadly optimizing seasonal hiring patterns in light of supply chain normalization and improved inventory management. “More seasonal workers will also help offset overtime costs, which we believe were a drag during the 2022 holiday shopping season,” Anmuth noted. In the U.S., the National Retail Federation estimates retailers will hire between 345k and 450k seasonal workers — up 2% year-over-year.

Seasonal weather supports holiday sales

The onset of winter is expected to boost clothing sales, especially in Europe. “We see more favorable weather in Europe throughout the fourth quarter of 2024 supporting pent-up demand for winter and seasonal merchandise, following unfavorable warm weather in the third quarter,” Boss noted.

European clothing data has shown slight improvements. In October, clothing sales in Sweden increased +4% on a year-over-four-years basis, while sales in Germany rose 9% year-over-year. In France, sales improved to -5% year-over-year in October, versus -11% in September. 

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