The holiday season is shaping up to be a record-breaking one for consumer spending, despite the challenging economic landscape marked by high interest rates. The Federal Reserve’s recent 50 basis-point rate cut is expected to inject some much-needed relief into consumers’ wallets, encouraging them to indulge in festive purchases.
Early forecasts from Adobe suggest that online spending will reach a staggering $240.8 billion between November 1st and December 31st, representing an 8.4% increase from last year. This includes spending on e-commerce platforms, discounts, Buy Now, Pay Later (BNPL) services, and mobile shopping. Electronics, apparel, and furniture/home goods are expected to be the most popular categories.
The forecast anticipates a surge in spending on Black Friday and Thanksgiving, with online purchases on Black Friday projected to increase by 9.9% and Thanksgiving Day spending up 8.7%. While Cyber Monday is expected to see more modest growth of 6.1%, Adobe anticipates that deep discounts, peaking at 30%, will drive over $2 billion in additional online sales for retailers.
Consumers are also likely to trade up to more expensive goods this year, a shift from recent trends. These high-end purchases are projected to account for 19% of total online spending, with electronics alone potentially representing 58% of this segment. Mobile shopping is forecast to capture 53.2% of total online spending, while BNPL sales are projected to reach $18.5 billion, a 11.4% increase from last year. Mobile purchases are expected to drive over 75% of this growth.
The discounts are expected to begin earlier this year, with deals starting in October and increasing to 16% off listed prices. This will ramp up to 18% in November before the Cyber Week.
Some of the most sought-after items this holiday season include:
* Bluey Ultimate Lights Sounds Playhouse
* Slime Kits
* Sony PlayStation 5
* Madden NFL 25
* Apple iPhone 16
* Ninja Creami Ice Cream Maker
The surge in online spending is likely to benefit retailers with a strong digital presence, including pureplay electronics retailers like Best Buy, Apple, and Sony, e-commerce giants like Amazon, and traditional retailers with robust online platforms such as Walmart and Costco.
Video game companies, such as Electronic Arts, which develops and publishes Madden NFL 25, are also poised to benefit from the increased demand. The game can be purchased through EA’s website, Amazon, and other video game retailers.
Buy Now, Pay Later (BNPL) companies such as Affirm, Block, and PayPal are also expected to see an uptick in usage as consumers embrace this flexible payment option.
The Commerce Department’s retail sales report for August highlighted the strength of online sales, demonstrating the underlying resilience of consumer spending despite broader economic challenges.
While the SPDR S&P Retail ETF (XRT) has experienced some recent volatility, the anticipated rate cuts and strong holiday season could lead to a rebound in the near term.
This holiday season promises to be a boon for retailers, particularly those with a strong online presence, as consumers embrace the convenience and affordability of online shopping. The increase in BNPL usage and the expected shift towards higher-priced items further highlights the evolving dynamics of consumer spending in the current economic climate.
