For many brands and retailers, the story of 2022 has been one of managing rising costs, and keeping a watchful eye on consumer behavior at a time of 40-year-high inflation.
With the peak holiday shopping season looming, inflation is still elevated, and there are warning signs emerging for the economy of a sustained slowdown.
It all adds up to a consumer that will be focused on stretching dollars and ultimately in search of deals, new data shows.
According to a survey of 14,400 American consumers conducted from September 3-6 by shopping rewards app Shopkick, 74% of holiday shoppers are tightening their budgets due to inflation and economic conditions. Further, 85% of consumers said price and budget will be the biggest influences as they build their holiday shopping list, and 35% plan to spend less on holiday shopping this year.
This focus on price could alter behavior in a number of ways. About half of consumers plan to shop for deals and sales, 37% plan to limit who they buy for and 36% plan to shop online more frequently to save on gas, the survey found.
For brands and retailers, this will create an environment where it is not only important to be competitive on price, but to stand out.
“Many consumers are facing the brunt of inflation, generating stress ahead of the holiday season,” said Brad Godwin, SVP and Head of Partnerships at Shopkick. “As the majority of consumers' top priority is looking for discounts and sales, retailers can expect to see a more competitive landscape in terms of shoppers comparing prices across retailers. Brands and retailers can start their holiday sales early, with a more consistent cadence to drive a steady traffic flow that accommodates consumers' plans to begin holiday shopping early. In addition, they can add more value by providing experiences and services for shoppers - such as one-stop shopping, BOPIS, free shipping, and easy returns.”
Fittingly, deals will also be the signal for many to begin, as 77% of consumers say sales and promotions will be the biggest influence in terms of when to start holiday shopping. The question is when – or, to be more specific, how early – that kickoff will take place.
Last year, supply chain challenges shaped seasonal preparations. This year, it’s price. In both cases, the result seems poised to be a longer holiday season. This year, shoppers may seek to buy items over a longer stretch to make dollars go further.
According to the Shopkick survey, 40% of consumers will begin holiday shopping before Thanksgiving, which is a 15% increase compared to last year. Further 27% plan to start before Halloween, which is an 18% increase over last year.
There’s a tradeoff that comes with this shift that could put less importance on BFCM (Black Friday Cyber Monday). About 43% of consumers said they were planning to shop Black Friday this year, which was an 18% decrease from last year. Meanwhile, 27% plan to shop Cyber Monday, which was a 40% decrease from last year.
Considering deal days as a whole, younger generations are more likely to shop these events, as 50% of Gen Z and 50% of millennials plan to shop Black Friday, compared with 44% of Gen X and baby boomers.
For brands and retailers, it’s a reminder to focus on providing value throughout the season. That may not come through one event alone, and it may be best accomplished by working together.
“We’re seeing a significant decrease in appetite for big, short-lived flash sales and deals days this year,” Godwin said. “Consumers are facing difficulties with the increased cost of living and are looking for more consistency in their holiday shopping. Brands and retailers can accommodate this through partnering and participating in rebates and rewards apps like Shopkick to help shoppers find immense value for the items they are going to be purchasing throughout the season.”
Another key dynamic of 2022 has been the resurgence of in-store shopping. However, the holidays have seen more and more online shopping in recent years, and that doesn’t look like it will change. The result is that consumers will be shopping across both channels.
“While there is an uptick in consumers planning to do their holiday shopping in-store compared to years prior, our survey found that 71% of consumers are planning to shop both in-store and online this holiday season,” Godwin said. “The omnichannel shopping experience is becoming an expectation for shoppers. Consumers want the flexibility to shop in-store and online seamlessly and access to deals via both channels. Brands and retailers need to be able to provide an enjoyable omnichannel experience to satisfy customer expectations, so they must prepare to support this increase in traffic both in physical retailers and online.”
Those channels also have particular expectations that shape consumer choice within them. When it comes to in-store shopping, consumers are most likely to gravitate toward retailers that offer discounts and sales (55%), one-stop shops that offer both holiday gifts and everyday items (40%). Additionally, 32% of consumers said they would visit fewer stores to avoid crowds and save on gas, even if that meant sacrificing certain items or not visiting preferred stores.
When it comes to ecommerce, the survey reports that 73% of consumers plan to shop at online-only retailers. Of those, 98% said Amazon will be the primary destination. Etsy will be a key destination for younger generations, as 43% of Gen Z plan to shop there and 35% of millennials plan to seek out the marketplace.
With shoppers having a choice of online channels, one way to stand out is by offering great service. To wit, 91% of consumers said free shipping is the most important incentive for online seasonal shopping. Other online shopping incentives that gained favor included fast shipping (59%), flexible and extended return policies (42%), buy now, pay later (19%), and BOPIS (15%).
Consumers will spend the next three months looking for the right items at the right price, while seeking a great shopping experience. Big retailers are lining up to deliver it. Amazon scheduled a two-day Prime Early Access Sale on Oct. 11-12, while Walmart rolled out a host of app upgrades, delivery perks and deal investments. Target will hold a Deal Days event on Oct. 6-8, and is extending a price match guarantee from Oct. 6 through Dec. 24.
For everyone below the top tier, the data indicates that the key to success may lie in tapping into that early-season energy, and making it last for the rest of the year.