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Expectations for the holiday shopping season are being shaped by inflation, an early start and a return to in-person experiences, according to a pair of studies released this week.
As with earlier reports, new surveys of consumer sentiment and retail executive views ahead of the holiday season from Deloitte and Accenture suggest that higher prices caused by a 40-year-bout of inflation are shaping shopper behavior. But the new data also provides specific clues as to how certain segments are approaching the year, and what strategies retail executives are embracing as they approach peak season. Here are five highlights from each survey.
Following up on its overall forecast for the season, Deloitte surveyed 4,986 consumers online between Sept. 6 and 14 for its annual Holiday Retail Survey 40 retail executives. Here are key findings:
Income stratification: Spending plans are split by income levels. Lower-income consumers (who make less than $50,000 a year), are planning to spend 25% more than last year, with the figure being similar to pre-pandemic levels in 2019, as well. High-income earners (who make more than $100,000 a year) are expected to spend 7% less than last year, with a pullback felt in categories such as electronics. Whether they are spending less or more, a majority of consumers cited inflation as a top reason for the shift. 51% of those who were spending more cited higher costs, and 66% of those spending less did the same. The latter was similar to 2021’s results of 67%.
Goods vs. experiences: Spending on gifts is expected to be nearly the same year-over-year, at $507 per household. However, consumers plan to purchase fewer gifts overall. Shoppers are also seeking ways to save money with the gifts they do buy. Gift cards are expected to net 7% higher spend in 2022. Meanwhile, 32% of shoppers expect to buy resale gifts, while 48% of retailers are selling refurbished or used products. Spending on experiences like entertainment and social events is expected to increase 7% year-over-year. In the end, overall holiday spending is expected to be equal to 2021.
Ecommerce share: Online shopping is expected to be a chosen holiday mode for 63% of consumers, while the share of those who plan to use smartphones for holiday shopping rose from 52% in 2019 to 56% in 2022. Meanwhile, 34% plan to use social media for shopping (that share is 60% for Gen Z), while 30% of shoppers said they follow influencers for product recommendations. There is also interest in exploring new buying approaches. 35% of consumers are planning to use modes like cashier-less stores, livestreaming, shoppable content and "buy now" buttons on social media to make purchases, up from 25% in 2021.
Easing supply chain: While more than 77% of shoppers expect stockouts, 100% of shoppers expect to receive items on time for the holidays. The latter is up from 57% who expected correct arrivals last year amid supply chain chaos.
The view from executives: 77% of retail executives expect holiday sales to increase on an annual basis. Meanwhile, 60% plan to start holiday shopping promotions 1-2 weeks earlier than last year, and another 60% feel comfortable with the amount of holiday merchandise they ordered.
Insight: "High prices have holiday shoppers prioritizing their purchases, but there are bright lights throughout the season,” said Nick Handrinos, Deloitte's US retail, wholesale and distribution and consumer products leader. “Lower-income families feel more confident heading into the holidays, younger generations are embracing new retail formats, and retailers do not anticipate the issues with stockouts we saw last year. As consumers aim to be strategic about their purchases to outsmart inflation, retailers who can be flexible to meet consumers where they are will be more likely to build loyalty and profit from the holiday season and beyond."
Expected holiday spending by category. (Courtesy photo)
For its 15th annual holiday shopping survey, Accenture conducted two studies in August and September: A survey of 1,508 U.S. consumers online, each of whom had purchased an item for personal use either online or in a store within the previous six months, and a parallel survey of 150 US retail executives. Here’s a look at key findings:
The organized consumer. Accenture used this term to describe findings that indicate many shoppers are strategizing ahead of the holiday season this year as they work to stretch dollars at a time of inflation. 35% of those surveyed said they will try to stick to a holiday budget.
Timing is everything: The early jump on shopping from retailers may be a response to consumers. 45% of those surveyed said they are shopping in different times than years past in search of deals, while 42% said they are shopping when promotions are offered. Equally, 44% of consumers are shopping earlier to ensure they have what they need, with 45% saying they had already shopped in August.
Highly promotional: It's expected to be a year of sales, and leaders confirmed it. 99% of executives surveyed plan to increase promotional activity, while 32% are optimizing pricing and promotions, and 35% are applying discounts or other measures to offload stock. When it comes to inventory, 98% are making availability guarantees part of their efforts, and 37% are stockpiling goods to ensure they have all the items they need to keep up.
In-store experience: With a return to in-person shopping, consumers want elevated offerings. An in-store service like a restaurant or beauty salon would entice 68% of shoppers to choose one retailer over another, while 68% also said that in-store pickup areas for online orders would be a compelling option. It all speaks to how the store layout is being reinvented. Anecdotally, Accenture said some retailers are creating a livestream studio to support ecommerce sales, or dedicating areas to collect orders.
Charitable giving: It’s the season to give back, even though costs are going up. The survey found that 27% of consumers intend to donate more than last year, while 31% expect to make non-cash donations to food banks or campaigns.
Insight: “In times like this — when prices are rising and merchandise stock levels are fluctuating — consumers feel the volatility and take a long view of the gift giving season to ensure they can enjoy the holiday celebrations,” said Jill Standish, a senior managing director at Accenture who leads its Retail industry practice globally. “To succeed in this market, retailers must pay close attention to data and analytics to identify areas that require increased marketing efforts, as well as targeted and highly customized offers to the different customer segments without eating into profits. Shoppers will reward retailers that focus on delivering a personalized and enjoyable experience when it matters most.”
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Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”