Checking in on 2023 winter holiday shopping trends

Episode transcript, edited for clarity.

Bill Thorne: Welcome to Retail Gets Real, where we hear from retail's most fascinating leaders about the industry that impacts everyone everywhere, every day. I'm Bill Thorne from the National Retail Federation, and on today's episode we are getting into the holiday spirit with NRF’s head of consumer research Katherine Cullen.

NRF expects spending to reach record highs this holiday season with growth between 3-4% to $957 billion. Today we're going to talk to Katherine about the most important things you need to know about how consumers are shopping this holiday season.

Katherine Cullen, returning guest, returning, and returning, and returning. Welcome to Retail Gets Real.

Katherine Cullen: Thanks so much, Bill, and happy holidays.

Thorne: And to you.

Cullen: You know, there's some debate on when the holidays start, but I think at this point, early December, we are fully in the holiday, so happy holiday.

Thorne: You can't argue that. It's interesting because Black Friday is always kind of the kickoff to the holiday spending season, and maybe it's just because, you know, we grew up that way, that I really do feel like the day after Thanksgiving — on Black Friday — is the true holiday start. But this is from the guy that finishes his shopping on Christmas Eve.

Cullen: It's funny you say that, because you know we all know sales and promotions start well before Thanksgiving weekend. And actually millennials — which I’m part of — are part of that group that really likes to shop early. They are generally ahead of other age segments before Thanksgiving weekend.

But to your point, by the end of Thanksgiving weekend (which you know NRF counts as ending on Cyber Monday), everyone's kind of the same point — about halfway done. You know, whether they wrap up in early December or decide they like that thrill of maybe not finding the gift they want (like a certain Bill Thorne) and head out on Christmas Eve. You know, to each their own, in terms of what they enjoy most.

Thorne: Yeah, I have a group of friends that I get together with for lunch on Christmas Eve Day. And that tradition started because they, I said, ‘Look, I'm going to be up at the mall anyway, so why don't we just meet at Spanky South Side,’ and it's right there at the mall.

And so we've been doing that, for — I hate to say decades, but it has been decades — and again, it's just something to look forward to, and I'm going to be shopping, so why not have a lunch with a, you know, a beer and enjoy the day?

Cullen: [overtalk] Squeezing that in right in between Super Saturday and December 25th, and all indications are, well, we don't have our data officially yet, but — given how close Super Saturday is to Christmas Day, the fact that Christmas Eve is on a Sunday, and a lot of people (Bill Thorne plans aside) will be, possibly …

Thorne: After church …

Cullen: … will be with family, and do we have other traditions — there are expectations that this could be a really strong Super Saturday. And we know, of course, it tends to be really big for stores as people who have run up against shipping deadlines and things like that. We'll of course have better numbers on that in a couple of weeks, but especially given the momentum we saw over Thanksgiving weekend itself, it does seem that people are embracing these really key moments in the holiday season.

Thorne: Well, tell me, since you raised it, what did Thanksgiving weekend look like?

Cullen: It was a really strong Thanksgiving weekend in terms of turnout and we were expecting that, of course. We had our highest forecast ever ahead of the shopping season for about 182 million consumers who said that they were expecting to go out and shop both in stores and online. And we saw higher turnout than even that, about 18 million more consumers, 200 million total went out and shopped over the five days, again, both in stores and online. And that's even a little higher than what we saw last year, which had been a record.

And, you know, there's of course the sense of ‘When do people actually buy and what's sort of motivating them.’ But I think it really speaks to the fact that in this — to use a phrase I think we all are tired of at this point — but in this new normal or post-pandemic normal, you know, people like to do what they used to do. They like to embrace these key moments. They like to take advantage of an opportunity to get out with family and friends. They like to find great deals.  

Of course, the fact that Thanksgiving was in the third week of the month, instead of the last week of the month, people had a little more shopping left to do. And this year we didn't have anything like major supply chain disruptions. You know, certainly winter illnesses are circulating around, but a little less concern around big spikes and certain things at least so far. And so, in many ways I think people felt comfortable resuming those traditions and really embracing the season.

Thorne: What is the difference between Gen Z and millennials as it applies to holiday shopping?

Cullen: You know, obviously a lot of differences, and some of them are being driven by phase of life. Millennials are very well-settled in their lives, versus starting out in their careers. And, you know, obvious differences people have talked about in terms of where different generations get inspiration.

I mentioned millennials tend to start shopping a little earlier. We seem to be a very ‘planning forward generation,’ while others including Gen Z tend to view Thanksgiving weekend a little more as ‘the kickoff’ or the time where they're going to find the best deals. 

But some interesting things we saw in our data in terms of what convinces someone to make a purchase. You know, obviously everyone's out there looking for something special for their loved ones, but you know, there was that purchase you might be hesitating about.

For the average population, for folks outside of millennials and Gen Z, you know, free shipping is a big motivator. Or a limited time sale or promotion. But what we see when we look at Gen Z in particular is they're more convinced by being able to use buy online, pickup in store, so that convenience factor. And they're also more convinced by ‘free gift with purchase.’ So maybe a little, ‘I get someone for someone else and I get a little something for myself as well.’ So, the ‘treat yourself’ component there.

And then millennials are a little more likely than others to say that a kind of easy to navigate, well-laid out store is a motivator for them. I would say more in terms of where they shop versus what they buy specifically. But we know that's an area [where] retailers have put a lot of investment into, including tools, telling people what's in stock and what's not.

Thorne: And where to find it.

Cullen: Yes, and where to find it.

Thorne: That’s one of the biggest things, I think.

Cullen: Mm-hmm. So, I think all of those are … you know, and obviously people respond to different, different things and that's true across generations. But seeing some of that play out a little. You know, millennials, a lot of them are parents and time is of essence [so] looking for convenience, they want not to feel rushed in shopping. Gen Z thinking also about convenience, but you know, again, a little bit of that splurge or treat yourself mindset going on there.

Thorne: What kind of shopper is Katherine Cullen? Do you ‘shop, shop’ or do you go and get what you need and leave?

Cullen: Well, it's a mix, Bill, but I enjoy shopping. I enjoy the retail experience. I particularly enjoy stores. I think there's so many incredible store experiences right now that … you know, it's not like just wandering in and digging through bins to find what you need (not that that was, you know, the norm either) but there's a lot of, sort of, I would say magic and entertainment value in stores.

I would say I very much fit with what I was talking about with millennials. I start my shopping definitely before November, heading into Thanksgiving weekend, I would say I had about 60% of my shopping done and wrapped up a large portion of it. I think I have just a few more people left to buy for. But a lot of it is, I research — again, I think very typical of the generation — to try to figure out what I want so that when I see the great deal, I can move on it.

I'm excited about what we're seeing in stores and I think we're going to continue. I know we say this every year, but I think other folks are starting to agree. We're going to continue seeing a lot of investment in the store experience in 2024, and a lot of innovation — whether that's on the AI front or the store experience front — to really change things up.

Thorne: It's interesting because (everything's interesting if it relates to retail) but it's particularly interesting when you think about the fact that retailers had some time during the pandemic to kind of figure out how to reconfigure that store experience. I mean, a lot of stores were closed, and so I think that they looked at it as an opportunity to kind of start investing in how to make the store experience an even better experience with the idea that they had to make it a safe experience as well.

So anyway, OK. We're into it. We're officially in the final weeks of the holiday season. So, what's left?

Cullen: Well, we know that consumers, whether they're millennials or Gen Z, whether they started in,

Thorne: Or Boomers.

Cullen: Or Boomers … they started, Thanksgiving weekend, are about halfway done on average. So, a little further along, well on par with last year, but around where they typically tend to be for the Thanksgiving weekend. So, a lot of shopping left to do for most people who aren't Katherine Cullen in the next few weeks. 

Of course, you know, people will be continuing to look for great deals. They're expecting that they'll continue to be able to find sales and promotions. Again, we expect to see a fair amount of momentum on some of the key weekends left in the season.

And people will be continuing to purchase the top gifts this year: clothing, gift cards tend to get a little more popular as we get closer and people are running out of time, toys and books. But we're also seeing a lot of interest in personal care and beauty items. That's a growth category right now.

You know, it's interesting, kind of, those toy/sporting goods/hobby-type gifts … we looked at some sales data from a partner of ours, Affinity Solutions, from last year, and what they see for most categories is  kind of a slow buildup to Thanksgiving weekend, a big peak, and then, you know, things kind of settle back down a little and tend to peak around weekends. But for that heavy gifting category like sporting goods and toys — that just continues to grow. You know, whether or not that item is on sale, you're going to get that top toy for your kid most likely.

Thorne: I wish my parents had always thought that way. Um, so I think the …

Cullen: But I’ve noticed it for my kids when I’m buying.

Thorne: I’m sure you have.

Cullen: I waited for Thanksgiving weekend and if wasn’t on sale, I’m still going to get it anyway.

Thorne: You know, it's the other interesting shopping day that it seems to me that we just really started talking about it — you know, Super Saturday. What does that look like?

Cullen: So, we're still waiting on the data for that, but it is just a couple of days before December 25th this year, so it is coming at a really critical time. We know that a lot of people, no matter how far along they are — and I tend to fall into this group — still find out that they have one last purchase they need to make in the week leading up to December 25th.  A lot of people tend to shop on weekends because it's when they have leisure time. So, we are expecting Super Saturday, a lot of momentum there, whether it's a last-minute shopper, or someone who maybe is realizing that they're running into some shipping deadlines, and won't get an item delivered on time.

And the other thing kind of playing into this is with Sunday being December 24th, there's the expectation that a lot of people will have other plans or other traditions, so they'll want to wrap up that shopping before the 24th.

Thorne: We have the shopping experience. People are going back to the stores. We know that traffic is way up, and we do believe that's probably a result of the post-pandemic mindset. But online remains strong. You know, folks that probably weren't online users as it related to their shopping experience, but now because of the pandemic, they had to do it. Are they continuing to do it?

Cullen: Yes, absolutely. Certainly, we saw some peaks in online during the pandemic, particularly when shutdowns were occurring and people physically could not go to stores. And to your point, people of all demographics across the country started using different tools to shop, shopping more online, using curbside, using buy online, pickup in store.

And when stores reopened, what we saw was people still like to go to the store and still like to do a lot of their shopping there. They might be doing a lot more researching online. But what we're really seeing, and I think we're seeing this across Thanksgiving weekend as well, is that consumers want it all. They’re going to buy when it's most convenient to them, where it's most convenient to them, and they're not going to say, ‘Oh, you know, I have to buy this in store. I have to buy it online.’

It's some decision in the moment of what works best for you and your lifestyle, and where it's easiest to pick up. Things like gifts — we know that a lot of people like to go and see those in person because there's an element of making sure that candle actually smells good, making sure that sweater is as soft as you thought it was going to be.

There’s those elements that, there's a personal, you want this gift to surprise and delight someone and be the perfect match. And so, we do see a little bit more in-store shopping during the holidays. But I think we're just going to keep on seeing people choose both, both options.

And of course, with curbside or being able to look up whether something is in stock in your store in a certain aisle, there's also that added sort of certainty of knowing that a trip is not going to be wasted if, for example, you're shopping more to get something done rather than to browse and to draw the experience.

Thorne: You brought this up, your boys — you've got twins. Do you have to get two of everything or do you just. How does that work? Because one could get really disappointed, I would think, if the other one got what the …

Cullen: Yeah, it's a mix. There's some shared toys and there's some ones that we've just realized it’s better to — ‘let's just avoid some arguments.’

But it is interesting looking at the top toys lists, and seeing how much my kids fall into that. So, we saw for boys that cars/trucks/vehicles, those are all, and remain, top toys for boys. It’s definitely something that really resonates. And Legos, which again I feel like this was my personal shopping list in some ways. But then … growing popularity around Spider-Man-themed gifts. They moved into the top 10 this year. So that's a big category.

And girls, of course, are a little different. Barbies and dolls are the top, but girls also very into Legos. You know, we've seen things like Lego Dots that are more how you can make jewelry with Legos or decorations. There's a lot of creativity going on in that space. And clothes and makeup. Of course, that's a little more dependent on age but a lot of interesting movement.

And then I was, personally, interested to see that some of the toys that we've really seen dominating the list the last few years — LOL Surprise Dolls and Squishmallows …

Thorne: What is that?

Cullen: It's very round usually, and I think it's supposed to be very, very comforting to, to hold. It's still popular, but not as popular as we saw last year, or relative to some of these others. But, you know, Bill, maybe I know what to get you now.

Thorne: Yeah. Really? No. The pet rock phase, I guess is over?

Cullen: The last couple of years I think is when they really popped, and there's a lot of different types and characters, and kids seem to really like them.

Thorne: OK. Well, everything, everything has its peaks and valleys. Do you remember what your favorite toy that you got for Christmas?

Cullen: Oh, that's a great question. You know, I more remember what I didn't get.

Thorne: Isn’t that the truth, but yeah.

Cullen: I really, really wanted a Polly Pocket and I did not get one, and I remember it vividly, and still a little, a little sad about that. And it's funny, those, the miniature-type toys and gifts are kind of coming back. So, you know, who knows, Bill, maybe I could still fulfill that dream. As a kid it’s a magical time of year in a lot of ways.

Thorne: I think my dad always bought us kids things that he liked when he was a kid or if he were a kid, this is what he'd want to have under the tree. And so, we got some really kind of neat stuff. I liked stuff that moved, so, you know, like a racetrack, Tonka trucks, those were big, that was always on the list. But now it’s Squishmallows. Wow. Times they really have changed. So, what's at the top of Katherine Cullen's list? What does she want for Christmas?

Cullen: It's a great question, Bill. Most important to me right now, this time of year, is all the holiday traditions — spending time with family, you know, I love decorating the trees and decorating the house — and I think that joy in those moments are just what's most special right now. If someone were to buy me a gift, however …

Thorne: Other than a moment, the gift of a moment?

Cullen: I felt like such a parent saying that …

Thorne: I was about to say that actually …

Cullen: This is a little niche, but I have an immersion blender. That's my favorite kitchen tool I've owned, but it's about a decade old and it's starting to wear out. So, I really hope someone — hint, hint — if some family member is listening, remembers to pick that up for me.

Thorne: Very, very good. Katherine Cullen. It is always a distinct pleasure to have you on Retail Gets Real. You learn so much, and you present it in such an easy, digestible way. Thank you for being our guest today.

Cullen: Thank you so much, Bill, and have a great holiday season and enjoy your last-minute shopping.

Thorne: Oh yeah. OK. I will. And by the way, I have bought zero. Just zero. I've been thinking a lot about it, but I haven't bought a thing yet. I will. Eventually. Someday.

Thank you all for listening to another episode of Retail Gets Real. You can find more information about this episode at retail gets real dot com. This is Bill Thorne preparing for the holidays and this is Retail Gets Real. Thanks again for listening. Until next time.