The hotly anticipated 2022 holiday season is a wrap! The most wonderful time of year turned out to be flat for retailers, with one twinkly exception: online sales.
This year, SAP Commerce Cloud powered US$31.9 billion in digital commerce gross merchandise value (GMV) for the entire holiday season, covering more than 70 countries around the world. Specifically, our retail customers saw a year-over-year increase of 80% in GMV, with a 29% increase in average order value (AOV).
According to MasterCard’s SpendingPulse, U.S. retail sales increased 7.6% year over year this holiday season. The metrics from MasterCard are not adjusted for inflation and with inflation at 7.1% at the end of November, most of that growth can be attributed to it. Online sales increased 10.6% year over year, making up 21.6% of total retail sales.
There is no doubt that inflation has changed the way consumers shop. Many have adjusted to spend less on discretionary items and spend more on experiences. Therefore, it was critical for retailers to offer valuable deals this season with consumers likely hunting for the best promotions. Retail customers of SAP Commerce Cloud saw a healthy growth in GMV and AOV in addition to a 138% increase in conversion rates. All this indicates better targeted traffic by retailers.
“Despite the challenging macro-economic environment, SAP Commerce Cloud retail customers were able achieve record-breaking holiday results,” said Riad Hijal, global head of Marketing and Solution for SAP Commerce Cloud. “Our embedded intelligence and broad capability set enabled them to identify and target the right customers with relevant promotions and offers without over-sacrificing margin. This led to higher conversion rates, AOV, and ultimately profitability.”
According to the Economist Intelligence consumer goods and retail outlook for the 2023, we can expect inflation to continue to dominate the discussion as it squeezes retailers, their profits, and the job market. Consumers will continue to look for deals and price reductions, likely fueling larger market shares for discount stores. They also predict that online sales will slow down even as its share of total retail sales will continue to steadily grow.
To learn more, visit the SAP Commerce Cloud solution area of sap.com and join us at NRF: Retail’s Big Show. Learn more about SAP at NRF at events.sap.com.