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Drive results this holiday shopping season: Leverage 2024 retail trends

by Sarah Craig November 13, 2024

With the 2024 holiday shopping season on the horizon, retailers are gearing up to adapt to changing consumer preferences amid a fluctuating economic climate. Here are a few trends that could impact retailer’s bottom line this holiday shopping season.

The impact of economic uncertainty 

Experts are predicting a 3% growth in holiday sales, which is below the 10-year average of 5.2%, and lower than last year’s 4.2% growth rate. While there is speculation that the recent interest rate cut by the Federal Reserve will increase the growth rate, retailers should be prepared for consumers to look for savings whenever possible. 

Outside of the economic factors happening across the US, consumers are conscious of retailer behaviors that might result in a higher bill, and adjusting their behavior accordingly. For example, the number of retail stores that collect tips has increased 70% over the past five years, resulting in consumers making smaller purchases to account for any additional tipping costs at the end. And due to rising fulfillment costs, studies show that 81% of retailers have started charging for at least one return method in the last 12 months, leading to more customers dropping off returns at the storefront location instead of utilizing shipping methods. 

One way for retailers to meet consumer demand for lower costs is through a loyalty program. Often, these loyalty programs come with discounts or free shipping, and consumers might consider these programs as a way to keep their holiday shopping budget in check. For retailers, this means ensuring the loyalty program offers a good user experience, and is easy for customers to enroll, and check their status or rewards earned while shopping.

Additionally, consumers might look for other discounts available, such as free shipping or buy-now-pay-later (BNPL) payment programs. Offering these incentives could provide your customers the final push to making purchases this shopping season. 

Speaking of shipping, it’s important to be aware of shipping taxability rules for states where you have sales tax nexus. Each state determines shipping taxability differently, and we break it down in this blog post. 

Increased demand for eco-friendly goods, including resale items

Sustainability is more than a trend. Consumers are embracing brands that have sustainable practices, and want to see things like eco-friendly packaging, sustainable sourcing, and transparent supply chains. 

One of the most notable industries is the resale clothing market. According to a recent survey, 46% of adults in the US have purchased something secondhand in the last three months. While there are still some obstacles for the resale market like brand authentication and return policies, we expect to see more businesses offer secondhand items alongside their new offerings going forward. For example, Kate Spade and H&M have recently launched resale programs to offer secondhand clothing alongside their new clothing lines. 

The rise in the resale market is likely due to a combination of environmental concerns and consumer price sensitivity, as these items are generally cheaper than new purchases. 

Providing secondhand items isn’t feasible for all retailers, but for those that want to meet the demand for the eco-friendly consumer, there are other actions available like providing eco-friendly packaging, and being transparent about sourcing and supply chains. 

Subscriptions as a popular gift  

The subscription economy continues to grow. In fact, it’s grown 435% since 2011, and is expected to reach $1.5 trillion in market size by 2025. The types of subscription offerings have evolved as well, extending beyond meal services and magazine subscriptions. Now, consumers can find a subscription for just about anything, from clothing, to books, to monthly spice boxes.

With options available for every niche market, these types of subscription services are popular gift options that provide unique experiences for gift giving. While these are great for recurring revenue, businesses should consider the sales tax implications of subscription offerings. We’ve outlined some popular subscription services and sales tax considerations in this blog post. 

How to prepare for the 2024 shopping season

For some businesses, sales made in Q4 will make up the majority of their revenue for the entire year. That’s why it’s so important to understand and adapt to trends impacting consumer buying behavior. 

Staying on top of consumer trends is challenging enough, but because of an increase in sales in the fourth quarter, many businesses will find themselves with sales tax obligations in new states. 

When you have sales tax nexus in a state, you’re required to comply with the sales tax laws in that state. Consider how the shopping season might trigger economic nexus in new states for your business, and be prepared to register for a sales tax permit in those states. 

We outline how to register for a sales tax permit in each state here, or you can let TaxJar handle the registration process for you. Visit our registration page to request our team of experts manage your sales tax registration on your behalf.

Ready to automate sales tax? Sign up for a free trial of TaxJar today.

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