Could the improving economy, bolstered by declining inflation, a low unemployment rate and rising wages, point to a busy and profitable 2024 holiday season for retailers?  Perhaps. The rise in consumer confidence was echoed by a Q3 McKinsey report which notes optimism in the strength of the U.S economy rose to 41%, increasing 8% from Q2 2024.

While holiday sales predictions vary, the news is good any way you slice it. Adobe predicts U.S. online sales will reach nearly $241 billion this holiday season (November 1 to December 31), which equals an astounding 8.4% growth, year-over-year. For contrast, shoppers spent nearly $222 billion in 2023. Cyber Week, the five-day period between Thanksgiving and Cyber Monday, is expected to drive $40.6 billion in online spending, nearly 17% of the holiday-related sales overall.

If Adobe’s predictions prove to be correct, Q4 and the holiday shopping season could indeed be a windfall for retail brands.

The expanding shopping season

Black Friday used to be the official (and chaotic) holiday shopping kick off, but as retailers launched online and instore sales promotions and discounts earlier, consumers have followed, getting into the holiday spirit by starting their gift hunts early, long before Black Friday.

The change in shopping behavior is also apparent in our 2024 holiday report, “Gift or Grinch? Unwrapping This Season’s Shopper Spending Plans.”  Based on a survey of 4,000 adult consumers in the U.S. and UK (equally split), conducted in partnership with Arlington Research, the report highlights some clear indicators of a robust fourth quarter for retailers. One unexpected finding points to the gift giving motivation of most respondents: nearly 59% of shoppers said they plan to cut everyday purchases in order to prioritize gifting budgets, and more than three quarters (76%) plan to maintain or increase gift purchases this holiday season.

The survey also aimed to find out how holiday gift giving attitudes and behaviors vary generationally, which we found fascinating. In fact, from our perspective Gen Z and millennials will lead the holiday shopping surge this year.

The generational shifts shaping holiday shopping

With a whole lot of spending power to wield, Gen Z and millennial consumers will be among the biggest gift givers this year, according to our survey. Perhaps it’s the optimism they’re feeling about the economy and their personal finances --  48% of Gen Zers and 40% of millennials expect their personal finances to improve this year. The former overwhelmingly prefer to shop online, with 96% in the U.S. buying from their favorite brands at least once a month.

With more spending power at their disposal, we found that Gen Z shoppers are twice as likely as the average shopper and 10.5 times more likely than baby boomers to purchase more gifts this season.

There are also dramatic differences in gift buying inspiration across generations: 65% of Gen Z and millennials rely on social media platforms to find coupons, offers and discounts - that’s nearly twice as much as older generations, which stands at 35%. Boomers take a more common sense approach to gifting as most (79%) say that cost is their primary concern when making purchasing decisions. Price is also a factor when it comes to choice of brands and whether they’ll visit and buy from that particular brand again.

The challenge for brands is to personalize the online shopping experience to address not only generational differences but leveraging “on trend” gift buying drivers, including social ad campaigns and influencers.

Budgeting and sustainability top of mind for younger generations

Gen Zers and millennials are also pragmatic about balancing holiday gift buying budgets, and how those budgets are allocated. Younger generations appear to be more than willing to make sacrifices, which includes cutting back on activities such as dining out, travel, entertainment and social events, to buy the perfect gifts. 

Sustainability is an important factor for Gen Z shoppers, with 18% concerned about environmental impacts of holiday gift giving and the potential for clutter, concerns shared by households making more than $100,000 annually.

An important takeaway from our survey is that both Gen Z and millennials particularly appreciate specific gift search categories, such as “gifts under $50” or “gifts for dads.” Not only do categories simplify the hunt for gifts, they also appeal to the more budget conscious boomers and contribute to an overall better customer experience.

Older generations prize value and the joy of gift giving

With many on fixed incomes, baby boomers are more concerned with value and the price of the gifts they buy. In fact, price will influence their entire holiday shopping strategy this year, while Gen X shoppers, particularly high-income earners, are motivated by the joy of the entire gift giving tradition. Our survey also found that 53% of top earning consumers, mainly in the Gen X cohort, find joy in purchasing the perfect gift for friends and family. They enjoy all the bells and whistles that go along with browsing and finding the ideal gifts that make giving as memorable and rewarding as receiving.

Gifting is not one-size-fits-all

Beyond the act of gift buying, our survey highlights broader changes in how various generations approach holiday shopping. Younger shoppers, for instance, are more responsive to targeted marketing strategies that utilize social media and influencer endorsements. In contrast, older shoppers tend to be swayed by promotions that emphasize savings, value, and reliability.

By addressing these shifting preferences and generational differences, retailers are faced with an opportunity to tailor their strategies to each, providing an inclusive and hyper-personalized shopping experience that leads buyers to the perfect gifts, creating repeat customers in the process.

About the author

Peter Curran is the General Manager of Commerce at Coveo. Over the years, he has worked across various eCommerce business models, categories, and company sizes. Peter co-founded and acted as President and Head of Sales for Cirrus10, a Web Content Management and Ecommerce Technology consultancy. Cirrus10 was acquired by Lucidworks in 2019. At Lucidworks he served as GM of Commerce, SVP Go to Market, and CRO. Peter then managed his own strategic consulting firm, implementing and tuning Constructor.io and OpenSearch. With 30 years of experience in enterprise technology, Peter has dedicated the last 15 years to enhancing product discovery across diverse industries, use cases, and platforms.