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What to Expect From the Holiday Season: Shopify President

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J.D. Durkin: I really want to dig into the numbers here. And the patterns that we're seeing with regard to retail sales. That data point jumped in the month of October and it showed the U.S. consumer is still really resilient. One part of the job here for the Fed is to try and lessen the spending power of everyday consumers. But a lot of the data shows us, they keep spending. And I'm curious, do you think shoppers will keep up this kind of momentum into the holiday season?

Harley Finkelstein: When we spoke to shoppers and businesses around the world, here's what they told us. First of all, we heard that shoppers are going to be a lot more intentional this year. They're going to vote with their wallets to support brands they love, but they also are seeking out the highest quality for the best value. The third thing that we are seeing is that the idea of being incredibly adaptable and resilient to what consumers require. So if you have great consumers who want to buy online, that's how you need to sell. But if they want to buy in store, you also have a great in-store experience. If they want to be able to buy on social media like Instagram or TikTok or anywhere in between, those things really are important. And then maybe the last thing I think that it's worth mentioning is this idea of direct to consumer. Years ago we used to talk about direct to consumer as being a bit of a fad, a new trend. But actually what we're seeing is it's steady state, direct relationships, large communities, great deals will be the key drivers for sales and loyalty. This year and last year, we saw 47 million shoppers buy from Shopify stores around the world. We saw peak sales of more than $3.1 million every minute on Black Friday. So it was a record setting weekend last year. We'll see what happens this year. But there's a lot to be optimistic about.

J.D. Durkin: There might also be a fair bit to be concerned about. I wonder, at least through the lens of inflation, we know that number is cooling, but consumer prices are still at or right about near a four decade high. How do you expect that component, which American consumers are at least seeing in the headlines day to day to impact their behavior in the holiday season?

Harley Finkelstein: When you think about Black Friday, Cyber Monday historically is being a weekend. It's now become a season. So what that provides is that consumers are getting better deals earlier. And so there is a little bit of mitigation on the cost there. But the other part, going back to my commentary about direct to consumer, one of the things that gets overlooked about the direct to consumer model, they have actually larger margins because you have less intermediaries in the entire retail stack or commerce stack. You actually do have some margin where you can absorb some of those. And so I think that you're going to see consumers are going to be generally more slightly more apprehensive than in the past. But again, I think they're going to vote with their wallets to buy from the brands they love. They're not going to buy a lot of things, but they're going to buy things they absolutely do care about.

J.D. Durkin: I think I also wonder to what degree big purchases fits into that equation, Harley, that you just broke down. We've seen some suggestion to give us an idea that consumers have been kind of holding off on some bigger purchases as the inflation number remains high. But do you think the holiday season may be an exception? Will we see shoppers begin to really shell out on at least a few big ticket items once again, considering it is, of course, the holidays?

Harley Finkelstein: I mean, that's where value comes into play, right? If you're getting a great discount on a great product that has high quality, this is going to be the time you're going to buy it. Most consumers anticipate and know that the next couple of weeks, and particularly starting Friday, Saturday and then up to Cyber Monday will be the time where their favorite brands will provide the best discounting. So if they're going to save up and they're going to wait for the right moment to spend, it's in the next couple of days.

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