A look at the 2024 holiday season

During this year’s upcoming holiday season, 53% of online sales are forecast to happen on mobile devices, according to a new Adobe Analytics report. Adobe projects that mobile shopping will “consistently eclipse” desktop going into 2025. 

Between January and July, consumer spending via mobile devices rose 10.2% year over year to $280.4 billion. During that seven months mobile sales sales comprised nearly half (47.7%) of all online sales, up from 46.6% the previous year.

While mobile personal care purchases made up 77% of all online retail sales, mobile groceries and apparel sales comprised 68.2% and 60.8%, respectively, of all online retail sales. 

A “tipping point” is on the horizon regarding mobile shopping. Consumers are consistently shopping more on smaller screens, with the first half of 2024 seeing consistent double-digit growth in mobile spend. With that behavior projected to continue into the holiday season and into next year it could spell “a major shift in consumer behavior online,” per the report. 

“Adobe Analytics data shows that consumers have embraced mobile shopping for purchases that are more frequent and lower in price, but we expect larger purchases will begin to shift towards smaller screens as well,” Vivek Pandya, lead analyst at Adobe Digital Insights, said in a statement. “Adobe’s data also shows that basket sizes on mobile are 32% smaller than on desktop, which presents both a challenge and opportunity for brands to refine mobile experiences and close the gap to drive revenue.”

The rise in mobile shopping can particularly be seen during the holidays. In 2021, 43% of online sales were on mobile, and by last year mobile overtook desktop for the first time with 51% of online sales, per the report. Last year consumers spent the most on mobile on Christmas Day, which drove 63% of online sales. 

Adobe’s findings build upon other research suggesting that online retail sales are growing in general. An FTI Consulting report predicted that online U.S. retail sales would grow 9.8% to $1.2 trillion in 2024.  

In the continuous search for deals, Adobe found that consumers are taking advantage of Summer sales on their mobile devices. During events like Prime Day, Fourth of July and Memorial Day, mobile sales comprised 51% of the average online retail sales, Adobe said in its report. 

Amazon set an Oct. 19 deadline for third-party sellers' inventory to reach its fulfillment centers to ensure Prime delivery speeds for the Black Friday ordering rush.

In a message to sellers last week, the e-commerce giant recommended sellers send Fulfillment by Amazon inventory to its facilities in August and September. This will allow sellers to have enough products in stock for the peak holiday shipping season, according to Amazon.

"Our fulfillment center teams will be focused on receiving inventory in September and October to ensure your products are placed in the right fulfillment centers ahead of peak," Amazon said. "In November and December, we’ll shift our focus to processing customer orders as this is our busiest time of year."

The Oct. 19 deadline is a week earlier than the one Amazon set last year, as the company looks to maintain fast delivery speeds during a condensed holiday season. Amazon announced Tuesday that it is currently delivering at its fastest speeds ever for Prime members as it reaps the benefits of a regionalized fulfillment model.

Sellers who miss the inventory receiving deadline may have tough luck finding space at Amazon's fulfillment centers. The company said it will have limited slots to accept shipments during November and December as it shifts its focus to ensuring fast delivery.

Amazon said sellers may encounter lower inventory capacity limits in October and November as well. The company didn't specify how much capacity would change, but sellers will have enough room for six months of inventory on average. Last year, Amazon offered higher capacity in October before it began reducing storage limits.

Capacity limits vary by account, but sellers can use Amazon's Capacity Manager tool to request an increase for a fee.

Sellers who exceed capacity limits this peak season won't have to worry about an inventory storage overage fee. Amazon said it eliminated the fee — which was based on how many days a seller exceeded capacity limits — on July 1 to help sellers simplify operations and manage inventory more efficiently during the holiday shipping rush.

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As the holiday season draws near, Santas everywhere are scouring for the best deals while carefully managing their spending. With financial pressures mounting and interest rates rising, offering flexible payment options like Buy Now, Pay Later (BNPL) at checkout is becoming crucial for retailers to meet shoppers’ needs. Here's why integrating flexible financing services can be a win-win for both shoppers and retailers this holiday season.

The rise of BNPL: A solution to holiday debt

Holiday shopping has always been a double-edged sword: the joy of giving often comes with the burden of debt. In 2023, over a third (34%) of Americans went into debt during the holiday season, with an average debt of $1,028. The majority of these debtors—67%—relied on credit cards, while 20% used store credit cards. To make matters worse, a third of those in debt are now facing high-interest rates, with 33% paying 20% or more, and 6% saddled with interest rates of 30% or higher.

This financial hangover can turn the holiday season from merry to miserable. Many shoppers are stuck making minimum payments, with 22% expecting to take five or more months to dig themselves out of debt. Enter Buy Now, Pay Later, letting shoppers spread out their payments without the risk of sky-high interest rates. In 2023, BNPL payments shot up by 47% on Black Friday and 43% on Cyber Monday compared to the previous year, with a record $940 million spent on Cyber Monday alone. This trend highlights a significant shift in consumer behavior, as more shoppers turn to flexible financing to avoid the pitfalls of traditional credit.

Meeting consumer needs: The appeal of BNPL

The surge in BNPL usage is not just a passing trend; it reflects a deeper change in consumer preferences. With rising interest rates on credit cards, shoppers are increasingly wary of incurring additional fees and interest charges. Buy Now, Pay Later services provide a flexible alternative that allows consumers to split their payments into manageable installments without the added financial stress.

For budget-conscious shoppers, this is particularly appealing. By opting for BNPL, they can enjoy the holiday season with less worry about falling into unmanageable  debt. This financial flexibility is especially important during a time when many are already feeling the pinch of rising living costs.

For retailers, offering BNPL at checkout is not just about meeting consumer demand—it's also a strategic move to ensure repeat business. If a shopper is saddled with debt and high-interest payments, they’re less likely to make additional purchases in the future, as their disposable income is tied up in paying off those hefty interest rates rather than spending with the retailer. By providing BNPL as an option, retailers can help customers manage their budgets more effectively, encouraging them to return for more purchases throughout the holiday season and beyond.

Plus, offering BNPL can help retailers stand out in a crowded holiday market. As more consumers begin to prefer and even rely on these flexible payment options, they’ll gravitate towards retailers that make their shopping experience easier and more enjoyable. This can lead to increased customer loyalty and repeat business, particularly during high-spending periods like Black Friday and the holiday season.

Helping shoppers spend wisely

This holiday season, the choice is clear: BNPL at checkout helps retailers attract more shoppers and accept more orders, while helping consumers better manage their holiday shopping dollars more responsibly. With a significant increase in BNPL usage and the growing financial pressures on consumers, integrating these services at checkout can provide much-needed relief for shoppers. Not only will this enhance the shopping experience, but it will also drive sales and foster customer loyalty.

By offering BNPL, retailers can ensure that this holiday season is not only joyful but also financially manageable for their customers. Don’t miss the opportunity to meet consumer demand, stay competitive, and keep Santa’s sleigh running smoothly—integrate flexible payment options at checkout and watch your sales soar while helping your customers spend wisley.

In recent years, for a variety of reasons — operational changes, challenges in hiring and corporate expense cuts — some retail stores are noticeably light on staff.

Since the height of the pandemic, store operations have grown more complex, as omnichannel services like online fulfillment, pickup and delivery have become entrenched. Hiring in many areas is tougher, as wages have risen and unemployment has fallen. And some retailers, facing threats to margins and profits, have slashed their expenses, including their workforces, often replacing humans with tech.

“A lot of stores run on much thinner staffing than they used to. Generally, there has been a reduction in headcount and labor hours,” GlobalData Managing Director Neil Saunders said by email. “Macy’s is a good example of this, as there are around 18% fewer staff per store than in 2019.”

It’s not just Macy’s. Employment across the sector is down and expected to decline further, according to the U.S. Bureau of Labor Statistics: As of March, retail unemployment was 5.1%, compared to 3.8% overall. In the next decade or so, the industry is set to lose nearly 77,000 workers, a 2% decline, compared to an expectation for 3% growth across all industries.

But running a store with a leaner staff is usually a mistake, and many retailers should beef up instead, even as they embrace new technologies for tasks previously done by humans, experts warn. For example, more than 40% of respondents to a survey by Theatro, which supplies communication tech for frontline workers, said that shopping in stores is “less enjoyable” than before the pandemic, and 60% of them blamed inadequate staffing levels.  

Store staffing “is an easy area to cut as it has a very visible positive impact on the bottom line — the problem is that it causes a lot of invisible issues which negatively impact things like staff morale and customer satisfaction,” Saunders said. “Ultimately, this can harm the top line.”

The tech vs humans fallacy

As the world anticipates the implications of artificial intelligence across society, retail executives are already making plans to invest in AI. Machine learning, AI-enabled technologies and older tech like RFID are helping retailers speed up and refine tasks like inventory management, pricing and theft-detection that are slower and less accurate when left to humans alone.

Then there is self-checkout, probably the most visible example of how stores have expanded their use of technology — the machines have become the dominant checkout format in grocery and have shown up at discounters, mass retailers and apparel retailers. But they’re also a good example of how humans aren’t easily replaced by technology, a lesson some companies, including Five Below and Target, have learned the hard way.

Consumers do appreciate self-service options, but have higher expectations around customer service since the pandemic, according to research from Theatro and Customer Management Practice, a research and advisory firm specializing in customer experience. Retailers that invest in those options without regard to how it affects their customers “will in fact see short-term gains, but end up with a pretty massive problem on their hands,” Customer Management Practice President Mario Matulich said by video conference.

“Our research has shown us that there’s a major misalignment in terms of what customer expectations are when it comes to the self-service experience and what brands and organizations are actually delivering,” he said.

There are often complications in deploying any technology, but especially when it’s designed for use by customers, according to Nikki Baird, vice president of strategy at Aptos Retail.

“If something goes wrong with the technology that's oriented for the consumer, then who do they turn to for help?” she said by video conference. “They turn to the store employee, so it becomes the employee’s problem anyway. Have you really made anybody's life better in those situations?”

Still, many store workers embrace technology, she also said, citing a Scandit study that found 40% of retail staff say their employers neglect their tech needs and about a quarter include tedious tasks and frustrating technology as a reason to leave their jobs. Bottom line, though, it’s a misunderstanding that AI and other tech means that stores can hire fewer workers, according to Jason Souloglou, CEO at SeeChange Technologies, which helps retailers improve efficiency and combat shrink.

Tractor Supply is one example of a retailer that has embraced AI to foster customer service, using it to alert store associates when lines are too long or help customers get information, CEO Hal Lawton said at the National Retail Federation’s Big Show earlier this year.

“AI frees up employees to conduct higher-value tasks and explore new growth opportunities by utilizing their creative, critical thinking and problem-solving skills,” Souloglou said by email.

Fewer workers, more problems

In 2022, unit labor costs (the total labor costs required to produce a unit of output), rose in retail overall, with annual productivity down for the first time since 2008, according to the most recent data from the Bureau of Labor Statistics. Most segments covered by Retail Dive, however, saw productivity gains, according to that report.

Meanwhile, retail work is now more elaborate, notes GlobalData’s Saunders.

“Activities like picking online orders, delivering curbside, and manning collection desks have absorbed many more hours,” he said. “In the case of stores like Walgreens and Target, having more items locked away is another burden on store staff. In a lot of cases this has created a labor crunch.”

Store labor costs loom large on the bottom line, and therefore are a perennial target for cuts, according to Lee Peterson, executive vice president of thought leadership and marketing at WD Partners, who has had a long career in retail, starting with working at and managing stores.

“Since my inception in retail, the first number that gets cut, no matter what everybody says, is the payroll number,” he said by phone. “It’s like ‘Do we really need 100 people stocking the stores? Let’s make it 75 and see what happens.’ You can cut that number today, it's just easy to do, effective immediately. And it’s a huge, huge mistake.”

Years ago, as a store manager running one retailer’s most productive location, Peterson got the call.

“I remember running the No. 1 store in the company and having them call me and say I had to cut my payroll by X amount,” he said. “I'm like, ‘You’ve got to be kidding me, I can’t cover the floor now. I can't keep the store straight. I can't wait on the customers. You're telling me I have to cut the number?’”

A store that lacks staff is vulnerable to theft and misses a key opportunity for customer engagement, experts say.

“Selling costs go up a little bit, but maybe shrink is going to go down to compensate for it,” Peterson said. “People are going to steal, so you need to think about that and work towards preventing it. One of the best ways, an unspoken advantage, is just having people on the floor. People will steal less if there's people on the floor because if not, what do you think's going to happen? It's a free-for-all. It's a bunch of shelves with stuff for thieves on them.”

Labor productivity is a major factor in cost containment, but retailers and brands should take into account the value of customer interactions in stores, Baird said.

“If you think about engagement — time spent, either at an employee level or even at a brand level — you can use that to understand cross-channel engagement,” she said. “Just how much time is this consumer spending with the brand? If they're browsing my social media feed, great, that is a level of engagement. But if they're standing in a store, and talking to a store associate, you can't get more engagement than that. That should be the top level.”

What it takes to hire and keep store workers

A year ago, hiring platform Checkr found that 74% of retail workers were either looking for another job or thinking about it. 

There are several possible reasons for this. Late last year, David Johnston, NRF vice president of asset protection and retail operations, told the House Homeland Security Committee’s Subcommittee on Counterterrorism, Law Enforcement and Intelligence that organized retail crime and fear of injury or death were major factors in the industry’s struggles to hire store workers. In written testimony to the committee, the group said there were 543,000 job openings in retail and “a clear shortage of workers,” characterizing retail jobs as “good-paying” and a “foundation for successful careers.”

But other research finds pay to be a major sticking point for store employees, while safety doesn’t show up as a top concern. In recent years, several major retailers, including Walmart and Target, have beefed up their starting pay to $15 per hour or so, and some jurisdictions are mandating even higher rates. Costco has made a point of being a leader in this area. Yet even those wages in many areas are still below a living wage.

In 2022, the real median earnings of retail salespeople was not statistically different from 2010, according to a December report from the U.S. Census Bureau. Cashiers were among the lowest paid, with median earnings of $27,174, nearly half of the median earnings for all full-time, year-round workers. Overall, the worker shortage in retail is due in part to low wages, according to staff placement firm Adecco’s Adia unit. 

“I have two words for every retailer about associates: pay them,” WD’s Peterson told an NRF audience in January. “Pay them, pay them! The more you pay them, the better they will be, that’s just the bottom line.”

Peterson cites Costco as a retailer with well-compensated employees who like working there, and Ace Hardware as another with plenty of helpful staff in its stores.

But some retailers that have boosted their wages subsequently hired fewer people or shortened shifts in order to keep labor costs in check, undermining the appeal of those jobs and compromising store operations, experts say. Good pay is important in enticing and keeping retail workers, but they have other considerations as well. Understaffing itself is a reason why many leave retail jobs, according to the Scandit research. Otherwise, work-life balance, competitive salaries and access to easy-to-use tech are the top three drivers of employee loyalty in retail, per that report.

According to research from Customer Management Practice, compensation comes in fourth, behind, in order, a good manager, flexibility and career development opportunities. Peterson also believes that brand matters most to many prospective retail workers, giving cool brands a hiring advantage over uncool ones, he said by phone.

Retailers are aware that stores should be well staffed, according to Aptos’ Baird.

“I think it's more a question of, ‘Where is this money going to come from?’” she said. “Part of how we got into where we are today, in terms of theft and self-checkout and all that fun stuff, is that wages went up, but labor budgets didn't. The natural result of that is many retailers are staffing less, and something has got to give.”

Dive Brief:

• “Financially fragile” buy now, pay later users are turning to the installment payment method more frequently than financially stable consumers, according to new research from the Federal Reserve Bank of New York.
• BNPL users who are financially fragile “appear to have embraced BNPL as a regular payment option,” the New York Fed said in its second report on BNPL, released Feb. 14. About 60% of that group have used BNPL five or more times in the past year, compared to just over 20% of financially stable consumers.
• Financially fragile users are also tapping BNPL for smaller purchases, the NY Fed said. The majority of financially fragile users are turning to BNPL to make purchases under $250, while financially stable users are far more likely to use it for purchases between $1,750 and $2,000.

Dive Insight:

The NY Fed previously deemed consumers using BNPL as more likely to be “financially fragile,” noting in a September report that they have credit scores below 620, have been delinquent on a loan or have been rejected for a credit application over the past year. 

The study released Tuesday, “How and Why Do Consumers Use ‘Buy Now, Pay Later’?” offers more evidence that BNPL is especially appealing to those who struggle to obtain credit, researchers wrote in the blog post. BNPL loan terms can vary, but the concept generally refers to interest-free loans paid in four or fewer installments.

With its report, the NY Fed aimed to “shed further light on BNPL’s place in its users’ household finances, with a particular focus on how use varies by a household’s level of financial fragility,” according to the blog post. Researchers drew on questions added to last October’s Survey of Consumer Expectations Credit Access Survey. Of the survey’s sample of 1,000 households, about 200 reported BNPL use. The financially stable label was applied to any respondents not considered financially fragile.

Among all users, one-off BNPL use is rare, the NY Fed said. About 72% of financially stable BNPL users and 89% of financially fragile users have made multiple purchases using BNPL over the past twelve months, researchers said.

Compared to nearly 30% of financially fragile users, just 14% of financially stable users have turned to BNPL 10 or more times in the past year. Use by the latter group drops off “substantially” after a few times, although a small group turns to it frequently, the NY Fed noted. 

When respondents were asked why they use BNPL, both groups emphasized the appeal of spreading out payments over weeks, according to a word cloud representation of responses. 

However, financially fragile users tend to talk about ease of access or a lack of money upfront to make purchases, while financially stable users mention the appeal of no interest and the ability to spread out payments without using a credit card. 

Notably, the results were gathered before the holiday shopping season, when BNPL use in online shopping jumped. Researchers flagged the frequency of use among the financially fragile as something to watch going forward. 

“Given that BNPL use in the U.S. has not been observed over a full business cycle, this factor will be particularly important to track, as households may turn to BNPL if their financial conditions worsen,” the NY Fed pointed out.

The NY Fed also noted the results “reveal some misunderstanding of the product” among users — even those who are financially stable — who seem to believe BNPL will enable them to build credit. BNPL loans are still not widely reported to credit bureaus. 

The Financial Technology Association, a trade group that counts PayPal and Afterpay owner Block among its members, suggested the NY Fed’s findings point to BNPL’s popularity with consumers. The study “shows that consumers want a competitive financial system and are choosing payment options without high-interest rates or revolving debt,” FTA CEO and President Penny Lee said in a statement.

A spokesperson for San Francisco-based BNPL provider Affirm, which provides more long-term, interest-bearing loans than its BNPL peers, said the company’s interests “are aligned with consumers as we have zero business benefit to extending credit that can’t be repaid as there are no late fees or hidden charges.” Affirm provides transparent disclosures and engages with credit bureaus, the spokesperson said.

With the benefit of an extra week, Nordstrom Q4 net sales rose 2.2% to $4.3 billion; with credit card revenue up 6.7% to $127 million, total revenue in the period rose 2.3% to $4.4 billion.

By banner, full-line Nordstrom fell 3%, in part due to the closure of its Canadian stores. Off-price Rack rose 14.6%. Digital sales were 38% of total sales and fell 1.7%.

Gross profit expanded by 125 basis points to 34.4%. Net earnings rose 12.6% to $134 million, per a company press release.

After a year of major adjustments to its full-line fleet, including the closure of its Canadian stores and San Francisco flagship, and a better-than-expected holiday quarter, Nordstrom has a lot to prove this year, analysts said.

On a Tuesday conference call, executives told analysts that new store openings and improved assortments drove Rack’s healthy performance. After opening 19 new Rack stores in 2023, the company aims to open another 22 this year, they said. Encouraged by the momentum at its off-price banner, Nordstrom Chief Financial Officer Cathy Smith said the company will begin providing comp sales data starting in Q1.

“Rack stores continue to be a growth engine for our company as they are our largest source of new customer acquisition, accounting for over 40%,” CEO Erik Nordstrom said on the call. “Growing our store count also supports long-term customer retention. In fact, roughly a quarter of retained Rack customers migrate to the Nordstrom banner within four years.”

But there’s some risk to the strategy, not least because department stores in general are ceding share to specialty retailers in apparel, beauty and home as well as off-pricers, according to William Blair analysts Dylan Carden and Alexander Vasti, a trend they expect to continue. 

“We see the biggest risk as continued declines at the full-line banner and ongoing volatility at Rack,” they said in emailed comments. “Thus, while Nordstrom does likely warrant some distinction as the best in the category, the ultimate scale of the business is still a moving target in our view.”

New Rack stores may not be contributing quite as much as previously expected, yet the company is swiftly expanding its footprint, according to Evercore ISI analysts led by Michael Binetti.

“[W]e’re a bit puzzled why the sharp ramp in new Rack stores isn’t having a bigger impact,” Binetti said in emailed comments.

BMO Capital Markets Managing Director Simeon Siegel is less pessimistic about department stores, given their importance to so many brands, but said that Nordstrom’s long-term viability depends on management’s execution on their goals, which seem lofty in the near-term.

“We see Nordstrom as a compelling partner for brands and do not subscribe to the ‘department stores are dead’ mantra,” he said in emailed comments. “That said, it is clearly challenged and with historically choppy [gross margins] coupled with Rack's relative underperformance among the off-prices and an aggressive fiscal year guidance at a time when most are being cut, we worry that, although shares appear inexpensive, numbers appear high.”

Nordstrom said that, including the impact of one fewer week this year, it “expects fiscal 2024 to be a year of continued momentum in its growth and profitability drivers, including opening new Rack stores, growing Nordstrom banner digital sales and driving comparable store sales across both banners.” That translates to an expectation for revenue growth (retail sales plus credit card revenues) of between a 2% decline to a 1% rise and comp sales to range between a 1% decline and 2% growth.

If Nordstrom is gaining momentum in off-price, it may be faltering at its full-line business, which is losing customers and market share, according to GlobalData Managing Director Neil Saunders. Over the holidays, the company’s department stores failed to live up to their reputation for stellar customer service and stand-out merchandise, he warned.

“While Nordstrom’s stores are nowhere near as bad as some of its peers, with relatively high price points it cannot afford to allow the proposition to slide in such a dramatic way,” he said in emailed comments. “In our view, over the year ahead Nordstrom needs to commit itself to rebuilding its full price stores. It must inject the energy and excitement that was once a hallmark of its shops. A failure to do this will likely result in Nordstrom entering a spiral of decline that is very hard to pull out of.”

Amazon will implement peak season fees across all products for various third-party seller fulfillment services, the company announced Thursday, the third straight year it has applied a holiday increase.

The fees will be active from Oct. 15 to Jan. 14, 2025, and can range from a few extra cents to several dollars more per unit compared to non-peak charges depending on the product's size. They will apply to Fulfillment by Amazon in the U.S. and Canada, North America Remote Fulfillment, U.S. Multi-Channel Fulfillment and Buy with Prime orders.

Amazon calculates and charges the fees when shipments leave its fulfillment centers, so products shipped on or after Oct. 15 will have the higher peak season charge, even if the orders were made before the active date, the company said.

Amazon said the annual fee, which it first levied during the 2022 holidays, helps it cover increased fulfillment and transportation operating costs when demand jumps during the busy shipping period. Parcel carriers like FedEx and UPS implement similar charges every year.

Compared to last year, the e-commerce giant said its average holiday peak fulfillment fee is the same except for U.S. Fulfillment by Amazon products priced under $10.

"Amazon’s average FBA fulfillment fees continue to be 70% less expensive than comparable two-day shipping methods offered by other major third-party logistics providers," according to the company.

Businesses selling on Amazon have grappled with various new and adjusted fees from Amazon in recent years as the company shifted to a regionalized fulfillment model. These include charges for low inventory levels and inbound transportation into its network.

Sellers have adapted to these changes, with Amazon seeing lower-than-expected revenue derived from fees in Q2, CEO Andy Jassy said on an Aug. 1 earnings call. That's not a bad thing for Amazon.

"The incentive we've given sellers to send their items to multiple Amazon inbound facilities so they can save money where they save us effort and money is getting more traction than we even hoped," Jassy said. "These collective developments will benefit customers in the form of better selection, lower prices, and faster delivery speed."

Amazon is doing more than implementing higher fees to prepare its network for peak season. It set an earlier deadline for sellers' inventory to reach its facilities to ensure Prime delivery speeds during the busy period, as the company readies for a shorter stretch between Black Friday and Christmas than in years past.

With the help of an extra week in the holiday quarter, Kohl’s Q4 net sales fell 1.1% year over year to $5.7 billion, with comps, excluding the extra days, down 4.3%. Other sales, including credit card revenue, were essentially flat at $246 million.

Gross margin expanded to 32.4% from 23% the year before, with inventory down 10%. The retailers swung into the black with net income of $186 million, from a $273 million net loss a year ago.

The department store also announced an exclusive licensing agreement with Babies R Us, now owned by WHP Global. The first shop-in-shops will open in August, with plans to expand to 200 stores in the fall.

Under CEO Tom Kingsbury, Kohl’s began re-orienting stores to boost impulse and gift purchases. That and improvements to stores overall helped the department store garner a Q4 comp result that was the best since 2010, he said. Expense and inventory control also paid off in the period, and fewer discounts helped bolster margins and move the company into the black, according to GlobalData Managing Director Neil Saunders.

“In this regard, Kohl’s management deserves praise as, operationally, there is now much more discipline around inventory management and buying,” he said in emailed comments, calling the inventory reduction “a marked improvement.”

But compared to pre-pandemic 2019, the department store’s sales were down 12.7%, as the wider retail market for non-food merchandise grew by some 24%, according to GlobalData research. Customers are increasingly turning to the more affordable assortments in apparel and home at discounters like Target and off-price stores like those run by TJX, Saunders warned.

The new Babies R Us tie-up recalls the retailer’s effort to entice new customers to its stores by adding Amazon returns and Sephora beauty shops. 

“We see significant opportunity in the baby gear category, and partnering with Babies R Us is another example of how we are finding new ways to optimize our assortment and further establish Kohl’s as the go-to brand for families,” Kingsbury said in a statement.

The company expects the “cleanup” of its stores to lead to sales growth this year, Kingsbury said on a call with analysts. Initiatives like the new tie-up with Babies R Us and emphasis on gifting and home are helpful, but the improvements to stores touted by Kingsbury are not all that evident, and the comp sales boost seen in Q4 had more to do with easy year-over-year comparisons and contributions from in-store Sephora shops, Saunders said. In particular, the retailer has much further to go in improving its weak apparel offer, he said.

Kingsbury is on the case, telling analysts that Kohl’s is adding 700 dedicated dress shops and expanding juniors, men’s, footwear, accessories and handbags.

“So, with all that said, it's hard not to feel very confident about our growth in 2024,” he said. “We have a lot of things that are working and a lot of things that we want to continue to go after aggressively.”

Kingsbury’s team is both sensible and experienced, but turning the retailer around won’t be so easy, according to Saunders. 

“We think the current plans can help to stem the tide of decline in the year ahead, but they are unlikely to produce stellar growth,” he said.

Mattel Q2 net sales inched down 0.7% year over year to $1.1 billion, capping off a first-half of the year in which CEO Ynon Kreiz said the industry bested expectations.

Gross margin in the period expanded by 410 basis points, and net income more than doubled to $56.9 million, according to a company press release.

The toy maker didn’t immediately respond to requests for comment on whether private equity firm L Catterton is interested in a takeover, as first reported by Reuters. On a call with analysts this week, Vice President of Investor Relations David Zbojniewicz said Mattel wouldn’t comment “on recent press reports or speculation.” 

Despite the sales decline, Kreiz said “this was a good quarter for Mattel,” citing “significant gross margin expansion” and increases in adjusted EBITDA and adjusted earnings. 

“We do expect our toy business to grow in the second half and look forward to a good holiday season for Mattel, with new product innovation, increased retailer support, more marketing and promotion and new content,” he also said.

He acknowledged that the toy industry remains under pressure, saying that Mattel expects the market to “decline modestly” this year, though not as much as executives thought it might when the year began. He also noted that collectibles and other toy products aimed at adults are driving demand, which “bodes well for our strategy in this area.”

The industry’s better-than-expected first half was largely driven by Lego, rather than the U.S. giants Mattel or Hasbro, according to research from UBS analysts led by Arpine Kocharyan, who said this week that “outside of building set category, [the] industry improved only modestly.”

In any case, Kreiz said that Mattel is gaining share in toys, with successful licenses and “great momentum in our entertainment strategy.” Barbie has demonstrated that, but there is more to come, he said, adding that “it's not just about Barbie and not just about movies.”

“What we're seeing is that the fundamentals of the toy business are strong,” he said. “Toys are an important part of consumers' lives, and retailers see the category as a strategic lever.”

Wholesale and retail partnerships will be key to Mattel’s success in the rest of the year. Kreiz alluded to “more shelf space” dedicated to Mattel products, though he declined to name a specific retailer.

“The way we work with retailers around the world, selling product today in 500,000 stores globally, and this is just ... brick and mortar. Of course, we have a large business in online retail and e-commerce,” he said. “And with those relationships, we are able to continue to expand our retail footprint, and that is what we are talking about, more shelf space in the second half. And part of that... is more promotion, more marketing and more activities to drive the business.”

Zbojniewicz headed off any questions regarding the rumored interest from L. Catterton, but did say that “we are very confident in Mattel's strategy and our ability to create long-term shareholder value as a stand-alone company.”

Executives on the call argued that the company’s momentum will soon be reflected in its share price. But Jefferies analysts led by Kylie Cohu said that Mattel’s valuation could be spurring takeover interest.

“The company has not confirmed these reports but given the current valuation levels, we would not be surprised if private equity interest is piqued,” Cohu said in a client note.

A shorter holiday shipping stretch and anticipated volume growth justifies UPS' heightened peak season surcharges, CEO Carol Tomé said during an earnings call last week.

The later timing of Thanksgiving this year, falling on Nov. 28, will result in fewer days for orders between Black Friday and Christmas to be delivered than in previous years. That means the 2024 holiday shipping season will be the most condensed since 2019, Tomé said.

UPS is expecting to encounter "the highest volume ever in our network" on Dec. 18, she added. "We think that the prices are going to stick because of what the environment is telling us from a demand perspective."

Even as shippers seek out lower-cost delivery options, UPS will implement surcharges for the 2024 peak season that are pricier compared to previous years. The amount of some surcharges varies by date, with prices peaking between Nov. 24 and Dec. 28. 

Fee hikes will start Sept. 29 for bulky and hard-to-handle packages. On Oct. 27, demand surcharges will take effect for UPS Ground Residential, Air and SurePost packages. The added fees are slated to end on Jan. 18, 2025.

The two demand surcharges are "a double whammy this year and will drive up costs" for customers that don't mitigate them, Onrout founder Jonathan Hessney said in a LinkedIn post.

"UPS has nicely given shippers more time than usual to prepare by releasing these in July (or it could be said they're moving first to try to get other carriers to follow)," he said. "Either way, there's still time to try to onboard alternatives, or negotiate discounts on the peak surcharges."

On UPS’ earnings call, Wolfe Research Managing Director and Senior Analyst Scott Group told executives that the size and magnitude of the surcharges came as a surprise. But the amount of volume UPS anticipates it will handle during peak justifies the pricing, according to Tomé.

UPS is grappling with a surge in volume from new e-commerce customers leveraging its SurePost service, CFO Brian Dykes said. The company's network capacity will soon be tested further by the emergence of its new contract with the U.S. Postal Service. The company expects to fully onboard the Postal Service as an air cargo customer before the holidays.

"When you have that kind of volume flowing to your network, you actually have to charge to service them well, because you have to hire people and lease aircraft and delivery vehicles, so on and so forth," Tomé said.

UPS rival FedEx is also confident in its ability to capture added revenue from peak season surcharges, EVP and Chief Customer Officer Brie Carere said during a June earnings call. As of Friday morning, FedEx has not released its 2024 peak season surcharges.

"The team has done a really good job in getting the increase we need to deliver an amazing peak where we do have to expand capacity," Carere said.

Amid a rise in mobile shopping, Gen Z shoppers are more likely to buy their holiday presents directly from social media platforms this year compared to other age groups, according to an EMarketer report based on Basis Technologies and GWI research.

While 42% of Gen Z shoppers said they’re likely to buy gifts via social media, only 26% of millennials, 15% of Gen Xers and 6% of baby boomers said the same, a survey of 2,000 U.S. consumers found.

While 57% of respondents said they would buy holiday gifts via Instagram, Facebook came in a close second at 56%, followed by TikTok (43%) and YouTube (38%).

Gen Z has been buying items via social media for some time now, according to various research. A Shopify and Gallup survey last year found that 48% of Gen Z shoppers had planned to purchase some of their holiday goods via social media platforms. In July, a survey from Walmart and Morning Consult found that 55% of Gen Z consumers have bought items online while browsing social media in the past six months. 

As Gen Z leads the charge on social commerce, mobile shopping is on the rise overall. Between January and July, consumers drove a 10.2% jump year over year in shopping via mobile devices to $280.4 billion, an Adobe Analytics report found. Mobile sales made up nearly half (47.7%) of all online sales.

EMarketer forecasts that U.S. social commerce sales will total $82.82 billion this year, making up 6.6% of total e-commerce sales.

Seeking to tap into the social commerce market, TikTok Shop debuted in the U.S. last September. The e-commerce hub allows businesses to make customized product collections on their profile pages and let customers manage orders and see product recommendations within the Shop tab. 

Meanwhile, Shopify and YouTube recently expanded their partnership as part of YouTube’s ongoing investment in social commerce.