The Current, delivered daily.
Discounts and social media are expected to be primary motivators for consumer behavior throughout the rest of the holiday season and into the beginning of 2023, according to a new report.
Discounts driving holiday shopping
Inflation may have started to cool over the last month, but prices still remain elevated across numerous consumer categories, with essentials like gas, food and rent being particularly high. Meanwhile, 60% of consumers are noticing higher prices in their everyday shopping on items such as cleaning supplies, clothing and beauty products.
That’s putting pressure on consumers to save elsewhere, and it’s showing up in purchase intent for the holiday season.
The survey found the following:
Consumers are expecting to spend nearly 40% less on holiday-related expenses this year, when compared to the 10-year national average, according to the National Retail Federation, while Jungle Scout found that 67% of consumers are planning to spend under $500.
At the same time, 33% of consumers are planning to cut back on their expenses for the holiday season, with the top ways being buying fewer gifts and decorations.
As they shop, more than 58% of consumers are searching for deals and discounts as they shop.
Digital is a mode of discovery
Holiday shopping is increasingly an online practice, and that means people are discovering what they want to buy through digital channels, as well.
As they scroll, 20% of U.S. consumers get holiday gift ideas from social media. Facebook leads as a source of inspiration, followed by Instagram and TikTok.
People are also ranking virtual gifts like streaming and music subscriptions among the most popular gifts of 2022.
The outlook for 2023: Responsible self-indulgence
Heading into 2023, people will still view financial security as a top priority, as 79% of consumers said they plan to re-evaluate finances while facing worries about inflation, gas prices and interest rates. Nearly equally, 89% of consumers believe the U.S. is headed for a recession, or already in one. The latter measure has ticked up from 76% in Q3.
But this doesn’t mean they are completely sitting on the sidelines of life. The survey found that people will also be looking to spend on experiences and themselves, albeit in a way that is fiscally prudent.
Jungle Scout found that 54% of consumers are making travel plans for 2023, which is up 16% from last year as pandemic restrictions move further into the rearview. Plus, dining out and getting manicures still rank among non-negotiable expenses.
In the end, 2023 is set to bring more change to consumer behavior, extending this period of upheaval well beyond the peak of the pandemic.
"Consumer expectations and priorities will shift in 2023, as inflation continues to impact spending," says Michael Scheschuk, president of small & medium business at Jungle Scout, in a statement. "As ecommerce advances, consumers will seek personalization at every stage of the customer journey. Brands should diversify sales channels and consider expanding into social commerce through popular platforms like TikTok, allowing them to engage with new audiences in more authentic and memorable ways."
Trending in Economy
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.”