Dive Brief:

• Despite other reports of retailers pulling back on discounts, the median promotion that retailers have offered during this year's holiday season has been $10 off, and the median percentage has been 20% off, according to a new holiday retail report from Square. The study said that the average number of sales and promotions this year closely followed trends in 2020 or 2019.
• The top five most in-demand items this year were hoodies, health and beauty products, jackets, diffusers and sportswear, the report found.
• Gift card purchases have increased 43% this year. And while physical gift card purchases were up 46%, e-gift card purchases rose by 29%, per the report.

Dive Insight:

Square attributes an uptick in gift card sales to supply chain problems that threaten to prevent products from arriving on time.

"Consumers have always loved gift cards, but this holiday season is shaping up to be the biggest year for them yet," the study said. Another report from the Blackhawk Network released in November found a 27% global increase and gift card spending compared to last year. An increase in gift cards may be good for businesses, who can lean on them to maximize sales. Historically 17% of transactions where a gift card is used result in overspend, according to Square. 

The report also said that consumer spending has not changed much compared to previous years — even despite retailers encouraging people to shop for the season as early as October. "Square found no considerable spike in consumer purchasing so far, indicating that holiday shopping is not starting earlier," according to the report. 

Meanwhile, the National Retail Federation noted in its revised predictions that this year's holiday sales could grow by 11.5%. At the time of its updated forecast the NRF said that consumers were "shopping earlier than ever this year because of concerns over supply chain disruptions," and that Thanksgiving weekend "now helps to mark off the holiday season rather than serving as the kickoff it once was." 

Though Square found that discounts have remained largely the same, other research suggests that some retailers offered consumers better deals than others. Per research from Wedbush, Adidas, Steve Madden and Timberland were "noticeably less promotional" than last year. On the other hand, Kearny found that brands and retailers like Macy's, Gap and Madewell offered more substantial discounts. 

"Businesses must find a way to create memorable and seamless shopping experiences during the holidays, further encouraging customers to come back into the New Year," Alyssa Henry, executive vice president at Square, said in a statement. "Convenience and customization will be key to meet buyer's needs and expectations this year. These are the moments of truth that really matter and will build sustained brand loyalty and reputation."