Will Economic Concerns Derail Holiday Retail Sales?
The biggest gift-giving holidays are still months away, but big box retailers are already feeling the pinch.
According to a new holiday shopping report by Emodo Institute, financial concerns and economic uncertainties have replaced COVID-19 as the biggest factors influencing how consumers plan to shop during the 2022 holiday season.
Nearly half of shoppers (49%) say they expect to spend less this holiday season than last year, and 45% say the state of the economy is delaying their holiday planning.
More shoppers say they will reduce their holiday spending this year than in 2021 or 2020, even during the height of the pandemic. That could be problematic for multi-location retailers, which rely on holiday sales to stay in the black during slower times of the year. Holiday sales in November and December account for nearly 20% of annual retail sales in the U.S.
Off to a Slow Start
The holiday shopping season is already off to a slow start, even in September. Many shoppers in Emodo’s survey said they won’t start shopping until later in the 2022 season compared to 2021, and they’ll likely rely more on Black Friday and Cyber Monday sales than last year.
That continued interest in limited-time discounts and deals on Black Friday and Cyber Monday might be a key for multi-location retailers looking to salvage an otherwise grim holiday season.
Retailers that start preparing now for a bigger Black Friday blitz in November could find themselves in a solid position, says Jake Moskowitz, vice president of data strategy at Emodo and head of the Emodo Institute. With almost three times as many consumers saying they expect to wait to start their holiday shopping until Black Friday or Cyber Monday, the campaigns leading up to those days will be especially important.
Moskowitz recommends that brands focus their campaigns on the quality of deals that will be available on or after those pivotal November dates for the greatest ROI.
Holiday Opportunities for Retailers
Emodo’s survey results also shine a light on the opportunity retailers have to connect with younger parents through targeted digital campaigns.
“Young parents are an interesting group to look at for clues,” Moskowitz says. “Eighty-percent of consumers who expect to spend more this holiday season are parents with children at home. And yet, the 25 to 44 year old age group is significantly more concerned about the personal impact of a recession. So, there remains a great opportunity to drive spend with this core parents demographic.”
Men are shaping up to be an important demographic this year, as well. Two-thirds of those expecting to decrease their holiday spend are women, and women are 56% more likely to believe a recession will have a big personal impact on them.
Emodo’s survey found that age is negatively correlated with perceived impact of the recession. Young parents are more concerned about the personal impact of a recession than older consumers, which means retailers will have more success promoting premium-priced products and non-discounted items to shoppers in older demographics.
“The most recession-proof categories appear to be fashion, indoor entertainment—games, crafts—and personal and household electronics, as those most concerned about a recession show the most willingness to increase their spend in these categories as opposed to other categories,” Moskowitz says.
Emodo’s survey results show that in-store shopping is back in a big way, providing yet another avenue for retailers to generate momentum. Just 35% of consumers expecting to increase their holiday spend in 2021 were planning to do so in-store. This year, 65% are planning to spend more in-stores.
“Even with finances becoming a bigger concern than COVID, physical stores are a huge growth opportunity. Remote shopping—both online and curbside [or] in-store pickup—are down in that same metric,” Moskowitz says. “To account for the 53% of shoppers that plan to use curbside pickup or shop online, retail brands should consider immersive creative, like AR, to enable those consumers a way to experience their products virtually. Brands sold at major retailers can also consider shoppable ads, those with ad-to-cart functionality, to drive online sales.”