Consumer insights to guide your holiday planning
“Consumers say 2022 is the worst economy ever.” That ominous Wall Street Journal headline may summarize how many consumers feel, but it doesn’t have to bring your business down. Use the sentiment as intel to help plan your holiday promotions.
Many factors are causing economic anxiety today, including inflation, Russia’s invasion of Ukraine, supply-chain shortages, and a possibly imminent recession. Our consumer research uncovered similar unease in April: 2 out of 3 people were concerned that rising costs would keep them from the purchases and experiences they wanted this year.
Our latest survey probed further, and the results can help you prepare and make adjustments, if necessary, as you prepare for the critical holiday shopping season. (The consumer spending trends detailed in our free ebook are also a great help in this time of economic uncertainty.)
Consumer caution continues
Worries about personal finances remain top-of-mind for many Americans today. Nearly half of consumers (49%) rated finances as a top stressor, over the political climate (48%) and COVID-19 (30%). Here are a few other takeaways for our survey about how shoppers feel:
Concerns over rising prices are more widespread this summer, with 86% of respondents they’re worried now. What’s more, 76% are worried about a potential recession this year.
Only half of consumers feel they are in control of their personal finances.
77% have made changes to their budgets to account for rising costs.
What to expect for the holiday shopping season
Despite those cautions, early holiday shopping is here to stay. More than a fourth of respondents (26%) said they would start shopping in September or October.
The early buying is expected to chip away at the volume from Thanksgiving and the 4 days afterward (Cyber 5). Analysts at eMarketer predict that the Cyber 5 share of holiday e-commerce sales will drop to 16.4% from 16.9% last year—well below the 20% share seen in 2019. So relying heavily on these 5 days to deliver maximum holiday sales may not be a good strategy this year.
With widespread caution due to economic uncertainty, 30% of shoppers say they are likely to use a buy now, pay later (BNPL) option like Affirm for holiday shopping. That intent is even higher (43%) among the 18-34 age group.
If last year is any indication, shoppers like having flexible payment options to help them spend responsibly during the holidays. BNPL transactions rose nearly 30% during the 2021 season—and they peaked at 43% during October with early holiday shopping.
Signals of economic strength are visible
A key part of the prevailing economic uncertainty is the word uncertain. There are rays of hope that still bode well for consumer spending:
Results from Amazon Prime Days in July show sales up 8% over last year’s event.
The Commerce Department reported retail sales were up 1% in June, which was more than expected because of inflation concerns.
Gas prices have declined for several weeks after peaking in early summer.
Ways to maintain a healthy sales volume now
Amid the unpredictable factors that change the economic outlook daily, you can take certain steps to help shoppers who may be more cautious due to budget constraints.
Offer 0% APR promotions. These offers can be very effective for closing more sales during peak times, like the holiday season. They also protect your margins and make a great alternative to discounting.
Optimize your omnichannel presence. Last year more than half of holiday shoppers planned to check a product’s availability online before going to the store. And here’s an inspiring example of how expanding an omnichannel presence can double sales in a year.
Offer buy now, pay later (BNPL) to your customers. This option can help remove price as a barrier and give shoppers more flexibility for fitting a purchase into their budget.
Try these 7 ways to increase your cash flow. One or more of these may inspire new tactics to try, like holiday bundling or a bonus promotion for your most loyal customers.
These ideas can help you boost sales volume today while giving shoppers more payment flexibility as they budget for the holidays. And getting an early start on holiday promotions can help ensure glad tidings for your business at the end of 2022.
For more consumer insights, download our free ebook: How the 2022 economy is shifting consumer spending.
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