Adobe expects U.S. online holiday sales to hit $221.8 billion this holiday shopping season (defined as Nov. 1 to Dec. 31), representing 4.8% growth year-over-year. Strong consumer spending continues to be driven by net-new demand and not just higher prices, according to the research firm, with Adobe’s Digital Price Index showing that online prices have fallen consecutively for 12 months and were down 3.2% YoY in August 2023. While Adobe’s holiday numbers aren’t adjusted for inflation, if online deflation were factored in, growth for the season would be in the range of 7.7% to 8.3%, said the company.
Adobe’s forecast is based on Adobe Analytics data that tracks more than 1 trillion visits to U.S. retail websites, 100 million SKUs and 18 product categories.
During the 2022 season, shoppers spent $211.7 billion online, representing YoY growth of 3.5%. This year, spending will be spurred on by “never-before-seen discounts” and increased usage of buy now, pay later options. Additionally, shopping on mobile devices is expected to hit a major milestone this year, surpassing desktop for the first time and driving over half of all online holiday spending.
“Despite an unpredictable economic environment, where consumers face several challenges including rising interest rates, we expect strong ecommerce growth this season on account of record discounts and flexible payment methods,” said Patrick Brown, VP of Growth Marketing at Adobe in a statement. “Buy now, pay later in particular has become increasingly mainstream and will make it easier for shoppers to hit the ‘buy’ button, especially on mobile devices.”
Cyber Week alone is expected to drive $37.2 billion in online spending, up 5.4% YoY and representing 16.8% of the holiday season. Adobe expects that Cyber Monday will remain the season’s, and the year’s, biggest shopping day, driving a record $12 billion in spending, up 6.1% YoY. Black Friday online sales are also set to grow by 5.7% YoY to $9.6 billion, with Thanksgiving growing 5.5% YoY to $5.6 billion.
And as seen in previous years holiday shopping will begin earlier than ever, with 49% of respondents in a recent Adobe survey saying that they plan to start this year’s holiday shopping in October. This early start will be prompted in large part by Amazon’s second Prime Day event, which will take place Oct. 10-11. The upcoming October Prime Day is expected to bring in $8.1 billion (up 6.1% YoY).
Discounts to Hit Record Highs
Adobe anticipates discounts of up to 35% off listed prices this holiday season as retailers contend with an uncertain spending environment and consumers continue to grapple with rising costs for food and gas. Of the 18 categories tracked by Adobe, toys, electronics and apparel are expected to offer the biggest deals. Discounts for toys are expected to peak at 35% off listed prices (vs. 34% in 2022), while electronics discounts are set to hit 30% (vs. 25%) and 25% for apparel (vs. 19%). The deepest discounts are expected to hit during Cyber Week.
Buy Now, Pay Later to Drive $17 Billion in Spending
Spending via buy now, pay later (BNPL) payment methods is expected to set new records this season, driving $17 billion in online spending, up 16.9% YoY and $2.5 billion more than last year. Cyber Monday is set to be BNPL’s largest day of the season with $782 million in spending, surpassing Cyber Monday 2022’s daily record of $658 million.
BNPL has already seen strong traction this year — thus far in 2023, BNPL users have spent $46.7 billion, up 14.7% YoY and $6 billion more than during the same period last year. In grocery alone, BNPL’s share of spending grew by a staggering 37.5% YoY. Other categories driving BNPL growth include home/furniture (up 25.9% YoY) and apparel (up 15% YoY). One in five respondents in the Adobe survey said they plan to use BNPL to purchase gifts this holiday season.
Mobile Shopping Will Overtake Desktop for the First Time
Adobe anticipates that 51.2% of online spending will take place on mobile devices this holiday season, a milestone reflecting improved small-screen shopping experiences. Mobile spending is set to hit a record $113 billion, up 13.7% YoY, with usage peaking on days when consumers are likely to be with friends and family, such as Thanksgiving and Christmas.