Consumers are waiting for discounts in Q4 and new customers are more expensive to acquire (thanks in part to the election).
The latest Salesforce Shopping Index data suggests that shoppers are holding onto their purse strings until later in the year — at least, if 2023 is any guide. The consumer caution exhibited in 2022 and 2023 will continue through 2024.
As far as ecommerce goes, this doesn’t mean it’s not showing YoY growth; it’s just that the growth is very modest so far — just 2% in Q1. That compares with 4% in Q1 2023. Order volume declined by 2%.
Last year’s price-conscious shopper is still with us
We sat down with Caila Schwartz, director of consumer insights and strategy for retail and consumer goods at Salesforce, to get a deeper perspective on the stats.
“We’re seeing a lot of trends precipitate from last year,” she said, “which is mainly this price-conscious shopper. Especially around the latter half of 2023, we saw shoppers wait until holiday season to make bigger purchases and a lot of sales getting concentrated into Cyber Week.”
Retailers are still seeing good digital traffic. “People are coming and browsing,” said Schwartz. “Where we’re seeing a pullback is in order volumes.”
But surely these trends are a direct result of the success of big sales events like Prime Day and Cyber Week? No wonder consumers are keeping their wallets shut in the first half of the year.
“Q4 is the biggest time of the year for retail,” she agreed. “What’s happening now is that shoppers are doubling down on essentials and lower-priced goods and they’re waiting to make [non-essential] purchases until later in the year.” A Salesforce sentiment survey conducted in April, 2024 showed three-quarters of consumers waiting until Cyber Week to make bigger purchases: “Furniture, appliances, those big ticket items, because they know that’s when they’ll get a better deal.”
It’s a Catch-22 for retail. “If they don’t need it now, they’re going to wait.”
Discounts remain important to shoppers
Predictably, consumers are still attracted by bargains. “We saw higher discount rates last year, but I wouldn’t say substantially higher than the year before,” Schwartz explained. “It’s a balance for retailers right now, margins and profitability against deeper discounts.”
If discounts are motivating for shoppers, another important prompt is free shipping. “That’s a little bit different than what we saw in 2020 and 2021. They wanted the product fast and were willing to pay for it. Now speed is not a top factor; it’s all about cost.”
Strategies that Schwartz identified for retailers included implementing tools that can do intelligent pricing and promotions — right-time and right-price to the right customer, so not over-promotional. This, of course, requires tracking consumer behavior data: traffic data, information about past purchases, what discounts they’ve used in the past and how they’re using loyalty programs.
“Loyalty is another factor that’s driving value for consumers,” said Schwartz. “One of the top factors driving decision-making is whether a consumer can earn and redeem loyalty points. That’s a value play for this price-conscious shopper today.”
The rising cost of targeting new customers
In addition to balancing profitability against the increased demand for discounts and free shipping, brands also face the growing cost of digital marketing. “Targeting new customers is becoming even more expensive,” said Schwartz.
What’s driving higher customer acquisition costs in 2024. “We’re in the middle of an election year. Election campaigns are buying up advertising. Temu and Shein are buying up Facebook advertising, Meta advertising. That’s making costs go up for everyone else because there’s less available inventory.”
The post Salesforce: Shoppers are saving their big moments for later in 2024 appeared first on MarTech.
About the author
Kim Davis is currently editor at large at MarTech. Born in London, but a New Yorker for almost three decades, Kim started covering enterprise software ten years ago. His experience encompasses SaaS for the enterprise, digital- ad data-driven urban planning, and applications of SaaS, digital technology, and data in the marketing space. He first wrote about marketing technology as editor of Haymarket’s The Hub, a dedicated marketing tech website, which subsequently became a channel on the established direct marketing brand DMN. Kim joined DMN proper in 2016, as a senior editor, becoming Executive Editor, then Editor-in-Chief a position he held until January 2020. Shortly thereafter he joined Third Door Media as Editorial Director at MarTech.
Kim was Associate Editor at a New York Times hyper-local news site, The Local: East Village, and has previously worked as an editor of an academic publication, and as a music journalist. He has written hundreds of New York restaurant reviews for a personal blog, and has been an occasional guest contributor to Eater.
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