Is Off-Peak Off the Table for Retailers?

As retailers look ahead to the holiday shopping season, reviewing the summer shopping season is instructive. Vertex's Summer Consumer Tax Survey shows that retail and e-commerce activity spiked this summer - despite the fact that this time period has long been considered "off-peak."

The traditional holiday season, which historically stretched from Thanksgiving through Christmas Eve, is now creeping into summer and autumn amid back-to-school shopping and Halloween purchasing. Consumer concerns about rising costs and economic uncertainty are key drivers of early holiday shopping. Vertex's survey research, based on polling of 1,000 U.S. consumers, shows that 53% of consumers purchased holiday gifts and related items earlier to avoid rising costs.

Holiday Strategy Focal Points

McKinsey Senior Partner Emily Reasor studies consumer behavior in the global retail sector, and she asserts that retailers should focus on value, both in their offerings and how they communicate about their products. "Consumers want to feel like they are getting a deal, and they are going to be particularly choosy about where they shop and how much to spend, so having both communications and actual delivery of great consumer value will be critically important," Reasor noted in a podcast earlier this month.

She offered two other recommendations for retailers planning their holiday-season strategies:

1. Prioritize essentials over discretionary items. Expect more spending on essentials as consumers cut back on discretionary purchases. As retailers plan their assortments, consider which mixes and bundles help consumers feel like they're giving gifts that their friends and family members actually need.
2. Start holiday messaging now. Recognize that holiday shopping is already underway—spending on holiday shopping and researching holiday purchases have begun. "Consider that in how you show up in stores and online," Reasor added. "Yes, it's back-to-school season, but many consumers are already thinking about Christmas, so it's important to make sure that your offering and in-store merchandising reflect that."

Tax Compliance Priorities for Extended Holiday Shopping

Indirect tax teams in retail and e-commerce companies can take steps to address holiday shopping compliance challenges:

1. Prepare for deal-driven shopping surges. Vertex research indicates that 69% of consumers shop during summer holiday weekend sales when many seasonal items are discounted. While appealing to consumers, these promotions can challenge retailers, making it critical to automatically update tax rates and maintain compliance. Back-to-school tax breaks and other sales tax holidays also can lead to shopping surges. Yet, sales tax holidays "are difficult to track and manage," notes Vertex Chief Tax Officer of Transaction Tax Michael Bernard. "It can be hard to distinguish between temporary holidays and permanent exemptions while delivering questionable payoffs."
2. Implement comprehensive tax automation. Short bursts of high-volume sales windows compress operational timelines while increasing the risk of errors. Mitigate this risk with a tax engine that automatically:
   • Updates rates and rules in real time across jurisdictions
   • Applies correct product tax treatment at checkout (online and POS)
   • Handles exemptions and sales tax holidays consistently to avoid over/under collection
   • Scales reliably from hundreds to millions of transactions without sacrificing accuracy

Finally, tax teams should address omnichannel tax compliance challenges, many of which relate to sourcing, timing, and the use of multiple fulfillment methods that trigger different tax rules and rates. Tools like Vertex O Series for Retail and Vertex E-Commerce Sales Tax solutions can help tax teams maintain compliance across all channels as the traditional holiday season continues to expand.