Truth or Dare: What awaits us in the holiday season of 2022
To put some context on the 2022 holiday season, I’m going to suggest a few concepts that have been creeping through my mind. Instead of focusing strictly on numbers, I will rely more on intuition and feelings. I’ve collected input from my editorial colleagues to gain an outside perspective, and I’m including marketing and retail messaging that supports these themes.
This won’t be a holiday for creativity
A colleague of mine nailed what I also think is the general sentiment among retailers.
“Doing anything crazy is risky. E-commerce has changed a lot since 2020 and people don’t necessarily want to ‘innovate’ in how they shop anymore. They are tired of it and instead prefer regularity. If there is innovation, it will not be something the shopper will notice. “.
It’s going to be hard to beat the economy this holiday season
One editor admits that economics is weird and doesn’t think it would be hard to beat. “Unemployment is what we traditionally call ‘full employment’ levels. Consumers continue to spend.”
“I’m not as pessimistic about this as many are. The unemployment rate is low, so most consumers have money to spend. Yes, inflation will limit their discretionary dollars and will likely force many to trade or look for deals. But there is a lot of pent-up demand for the holiday season. Fun, and that should help retailers.”
There are many obstacles
Digital Commerce 360 asked 70 retailers in September and October 2022 about the obstacles they faced. This vacation profitability rises to the top with increased costs (59%), high inflation rates (56%), achieving profitability goals (43%) and managing marketing budgets (36%) among many others.
Perhaps the most important finding is that fluctuating consumer confidence makes it difficult to predict what lies ahead, as stated by 44%.
It is useful, then, to take a look at the tactics retailers are putting in place to adapt to this economic climate. Cost containment has risen to the top, and 50% said they adjust product prices as circumstances dictate. On the inventory side, 46% of retailers review inventory on a regular basis. Meanwhile, 24% demand heavy purchases of major goods.
So what is the retailer doing with the consumer and what to expect in the all-important holiday season of 2022? Inflation is number one in their minds and 63% of those surveyed believe it will cause consumers to buy less.
Shoppers will focus on finding good prices due to inflation and personal circumstances. Our Digital Commerce and Bizrate Insights survey of 1,088 online shoppers in September 2022 found support for these economic conditions. Shoppers are looking for the best price, and 40% said they would compare shopping because of the expected prices. Fortunately, only 35% said higher inflation would result in less overall purchases. This is in line with retailer findings when it comes to comparison shopping, with 53% expecting consumers to do more and convert less.
The comparison shopping mentality has manifested itself outside the web. When I was shopping in late October, I happened to come across this sign at a Target store in New York City. A holiday price match guarantee certainly indicates that the retailer wants to encourage its customers to shop early, letting them know that it will be risk-free.
Shoppers will buy early due to fears that stocks will run out
To me, buying looks like it’s going to be a marathon like 2021 when all is said and done. To think that running out of stocks will again pose big problems sounds like hype. However, our Digital Commerce 360 research reveals that half of all retailers believe online shoppers will buy early to avoid running out of stock in the 2022 holiday season. However, only 34% of these retailers expect online shoppers to find products out of stock. Inventory more than in past seasons. Along with this high stock, more promotions should come, according to 33% of survey respondents. Unfortunately, this may not translate into results, as only 13% of retailers believe shoppers will switch frequently due to fear of running out.
From an inventory perspective, 36% of retailers have challenges managing inventory levels and 30% with refining product assortments
There is no urgency among buyers
The inside perspective looks like this is going to be a ‘wait and see’ game.
One colleague wrote: “Promotions may have changed some of my earlier purchases.” “But some shoppers are waiting for economic and election news before finalizing their holiday spending plans.”
“Shoppers fear less stock and delayed deliveries this holiday season. I feel there is less urgency overall.”
“Yes, the fear of running out is now ingrained in many consumers. But by accounts, I don’t hear friends talking about early holiday shopping. I don’t think sales will skew much sooner than they have in recent years.”
“Inflationary pressure makes it difficult to shop early. This means that consumers will end up scrambling at the last minute, buying on credit, etc.”
Personally, I don’t expect shopping styles to be much different. The timing of Prime Day and subsequent “early access” sales will likely change behavior, but a three-year look at shopping patterns finds them converging through the end of October (2022-44% vs. 2021-40% vs. 2020-39%).
One cannot help but notice that most retailers are now taking a similar position to that of DSW. Like many retailers, it encourages its customers to head over to giving gifts regardless of sentiment.
Promotions won’t be as loud as 2022 holiday season shoppers would like
The case for promotions does not have the usual grit. My sense is that “Promotions will be consistent, but percentages won’t be as high as shoppers hope. As I watch my email, I mostly see 20% to 25% wide markdowns with a few exceptions of course.”
As one editor explained, “People are expecting promotions this time of year. But retailers aren’t likely to dig in. They won’t have to.”
There seems to be a lot of hype in the media about early buying and corresponding promotions, but retailers haven’t been that bold yet. Here are some views on promotions from our team, and you can build your own perspective as you see fit. It is likely to change throughout the year.
“It will be about promotions, but I don’t anticipate the big write-offs. If they are close, most think that later in the season they will come close to cutting ground shipping.”
“Come on Thanksgiving weekend, we’ll see good discounts. Early sale may be more frequent but it’s not as deep and frankly less successful.”
“We’ll see a lot of big percent discounts on the numbers, but the actual final prices won’t be lower than last year. Retailers have been in the price hikes ahead of the festive season with discounts in mind.”
“Expecting big deals will not come true because of inflation.”
“Like most things in retail, promotions will be high, at least early on. Once every retailer sees their stance on Cyber 5, they’ll adjust. Those who aren’t stuck with a lot of inventory will cut back on discounts, while they’ll cut Others are more likely to transport merchandise.”
Physical stores fail to interest shoppers, so they are drawn to convenient online options
Shopping in my store lately suggests some holiday excitement, even though the stores mostly have few public or festive offerings. There was little belief among our team that the store’s role would see significant gains. Instead, here’s some of what I heard.
“It’s always great to find that perfect gift in-store. But nothing beats the convenience of online shopping. Many people started returning to stores a year ago. Now, I think most people will go into stores for anything they still buy from retailers other than Amazon”.
“Many will go to the stores to enjoy the festive season. But those who are busy now know more than ever that they can shop at home. The bad weather is likely to have a greater impact than in the past, as more consumers are getting comfortable with online shopping.”
“I’m too lazy and too busy to go to stores and generally hate going to the mall, so I think people like me will still rely on online shopping.”
“I doubt it. It’s hard to compare prices in the real world to online ones. My sense is that the fear of crime in stores has escalated.”
On my store visits, I’ve definitely seen some well-executed examples like Crate & Barrel. Our displays attract customers and hopefully inspire them to buy.
The fact of the matter is that this is a holiday full of unknowns, from promotional strategies to early buying and how the consumer will behave in a challenging economy at best. The obstacles are obvious, but consumer behavior is a big question mark. It might just be someone sitting around and interfering with the January postmortem hearing.
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