Christmas shoppers focus on quality rather than deals

While discounts drove purchases in the early days of the holiday shopping season, consumers are opting for more thoughtful, quality gifts in the second half of the season as overall spending growth slows.

American consumers had spent $187.3 billion so far online between Nov. 1 and Dec. 12, up 6.1% from the same period last year, according to Adobe Analytics. Total e-commerce spending during the holiday season is still expected to exceed $253 billion, which would be 5.3% more than last year, and the growth rate will slow later in December as deliveries in time for Christmas become tighter.

E-commerce sales typically “decrease dramatically” from around Dec. 16 to Dec. 18, and then “decline rapidly” in the following days, until Christmas Eve is the slowest shopping day of the season, Casey Armstrong, ShipBob's chief marketing officer, told CNBC. Armstrong said purchasing picks up again on Dec. 27, which is typically the strongest day for ShipBob customers at the end of the season. The company is a third-party logistics company that ships for small, medium-sized, and socially oriented brands.

For shoppers willing to place online orders in the second half of the season, quality, rather than discounts, is what generates interest.

Captify analyzes over 1 billion search events per day across 3 million websites and shows huge growth in searches across apparel and athletic brands including Alo Yoga, Warby Parker, Aritzia, Bombas and Quince in December compared to earlier in the season. Searches for Alo Yoga increased 256% during the period from December 7 to December 15 compared to the period from November 28 to December 6. Searches for Quince increased 124% during those same time periods.

“These developments point to a rise in thoughtful, quality-based gifting as shoppers look for products from high-end brands,” said Oscar Chow, U.S. chief insights officer at Captify.

RetailNext, which tracks in-store purchases, has also seen evidence that consumers value quality this season, even if that means buying fewer items.

“Consumers are willing to pay more to make the right decisions,” said Joe Shasteen, global manager of advanced analytics at RetailNext. The firm expects this dynamic to reach its peak in the days before Christmas.

There is also evidence showing a shift towards gifting and subscription experiences as the season winds down. Chow said they offer buyers a “deadline-proof gift.”

Examples include growth in interest in the final weeks of the season for Roblox Robux, Cameo Kids, Kindle Unlimited, Strava Subscription, Peloton All-Access, MasterClass subscriptions, and the Disney+, Hulu, and HBO Max subscription bundle.

Discounts are still available as holiday shopping winds down, but they are much lower than during Cyber ​​Week highs. Adobe Analytics said toys will see the biggest promotions, peaking at 15% off list price in December, followed by furniture, bedding and TVs at 10% off.

There are undoubtedly consumers motivated by discounts throughout the season, making toys a strong category. Data from Adobe and Captify show that consumers are still looking for Mattel's Barbie Dreamhouse, Disney's Stitch toys, and Play-Doh playsets, among others. Armstrong said the Toniebox 2 audio player and Mrs. Rachel Tonies figure are “a top-notch item that's generating buzz.”

For those who want to give a physical gift, stores are essential in the days before Christmas.

The last Saturday before Christmas has been dubbed “Super Saturday” by the retail industry and is typically one of the biggest shopping days of the year. But since Christmas will fall on a Thursday this year, volume will likely be lower on Super Saturday this year than on December 22-24, according to RetailNext.

“We expect some of the highest conversion rates of the season to occur in the final days before Christmas, potentially rivaling or even surpassing Black Friday,” said RetailNext's Shasteen.

The warmer temperatures and dry conditions hitting much of the country this weekend should also help increase store traffic this weekend, according to Evan Gold, executive vice president of global partnerships and alliances at Planalytics.

Shoppers who don't want to browse stores, but also don't want to risk shipping times, are increasingly turning to buy online and pick up in-store options in the final stretch of the holiday shopping season. Adobe Analytics predicts that BOPIS will peak on December 22-23, with between 32% and 37% of e-commerce orders using the service, an increase on typical usage from the rest of the year.

Kohl's told CNBC that its pickup orders more than double in the week before Christmas and that a quarter of shoppers who pick up an online order end up buying something else while they're there.

At Bath and Body Works, about 30% of customers who pick up online orders add something before checking out.

It's also a cost savings for retailers to order online from stores. Target has said that drive-up or order pickup saves the retailer 90% compared to brown box delivery from fulfillment centers. So far this season, three-quarters of its digital orders have been picked up in stores.

Walmart told CNBC last year that scheduled weekly pickup volume increased 14% in the two weeks leading up to Christmas compared to the average volume of the previous 12 weeks. More than 80% of Walmart customers say they shop in the store in the three days before Christmas, according to its Christmas Pulse Tracker of Customer Strategies and Insights conducted this month.

Last December, volumes for Walmart Express Delivery — orders placed from store inventory that come with an additional fee — reached 2.5 times the monthly average. The retailer said that on Christmas Eve alone, 77% of digital orders were fulfilled through the express option.

While Dick's Sporting Goods declined to share specific details, the retailer said it sees a “significant increase in BOPIS” as Christmas approaches, and also sees a “lock-in rate” for shoppers “to ensure they grab those last-minute gifts in one trip to the store.”