3 trends to watch as retailers prep for back-to-school, holiday shopping

Summer vacation season is just getting started, but retailers are already gearing up for the holidays.

In coming weeks, companies will get early clues about how the all-important holiday shopping season will shape up as Amazon hosts its Prime Day on July 12 and 13 and rival retailers including Target hold competing sales. That will be followed by the busy back-to-school shopping period, another indicator of how the holidays could play out.

The trends that retailers detect starting next month could signal how much people might be willing to spend during the holidays, as well as the type of products they'll want, said Rob Garf, vice president and general manager of retail for Salesforce, a software company that also tracks shopping trends for retailers.

Complicating sales forecasts for this year's holiday season are surging prices for gas, groceries and other household needs that are whittling away at how much people might spend on gifts.

To anticipate how those factors will sway shopping behavior, Salesforce made predictions for the upcoming holiday season based on two of its reports. Its quarterly shopping index analyzes the online activity of more than 1 million people in dozens of countries, with a focus on 12 key markets including the U.S. Its other report is consumer sentiment index based on a May survey of more than 3,000 people in nine countries.

Here are three of Salesforce's predictions, according to a report released Tuesday:

Expect the under-the-bed stash of holiday gifts to start earlier.

Over the past two years, people started shopping before Black Friday because of worries about shipping delays and depleted shelves. This year, people will be looking to stock up on discounts and beat price hikes, according to Salesforce.

Forty-two percent more shoppers worldwide and 37% more in the U.S. said they plan to start buying gifts earlier as a way to get better deals — the biggest inflation-related behavior change that Salesforce noticed in its research.

For some, that could mean Christmas shopping will start in July as people jump on deals during Amazon Prime Day and competing sales. Others might try to load up on presents as retailers including Target and Gap discount items to unload the unwanted inventory they stocked up during the pandemic.

Cooped-up shoppers splurged from their couches during the past two holiday seasons. Now they'll be taking a harder look at price tags — and going elsewhere if they don't like what they see.

Value is expected to trump loyalty and convenience this holiday season, Garf said.

Half of shoppers are expected to switch brands to save money, according to Salesforce. That translates to 2.5 billion shoppers across the globe who might decide against a product in favor of one that better fits their budget.

To avoid having to compete on low prices alone, Garf said, retailers should generate buzz by offering exclusive or limited-quantity items, or play up trendy features, such as a product's sustainability.

Otherwise, he said, retailers' profits could take a huge hit if they discount too early and too often. Already, he said, their profits are being squeezed by higher costs for fuel, labor and other items.

One of this holiday season's hot gift items won't go in stockings or under Christmas trees.

Non-fungible tokens, or unique digital assets that are stored using blockchain technology, will be on the list for more people this year, according to Salesforce. Forty-six percent of shoppers told Salesforce they would consider gifting a virtual version of a physical item or a digital collectible.

About half a million NFTs are expected to be purchased from retailers between November and December, translating to a total market value of $54 million, according to Salesforce. Though NFTs have become more popular in recent years, some experts are still skeptical they're a good investment.

Still, Garf compared NFTs to the popularity of savings bonds in the 1980s, with people giving bonds with the intention that they'd grow in value over the years. Think of NFTs as a high-tech spin on that, he said.