Despite turbulent times, the holiday spirit is palpable this year. According to McKinsey, 55 percent of US consumers are excited about holiday shopping in 2022, and 40 percent intend to splurge on themselves or others.1 Online holiday sales alone are likely to hit USD 209.7 Billion, representing a 2.5 percent growth year on year.2 A recent survey found that 60 percent of customers in the Asia-Pacific region are likely to increase their holiday shopping budget in 2022, compared to 2021.3
That said, the economic pressures that consumers face will define the holiday season this year. The situation is grimmer in the UK, where e-commerce sales are anticipated to decline by 5 percent year on year.4 In the wake of the worst inflation that the UK has suffered in four decades, most consumers are likely to spend less this year. A McKinsey study shows that rising prices are the biggest concern for 69 percent of consumers in the UK.5 The survey emphasizes that this consumer pessimism is visible across major European economies. In the US, almost 73 percent of shoppers expect higher prices this year due to inflation.6
In response, retailers will have to raise their game to meet the needs of holiday shoppers looking for a deal. An extended holiday period means myriad opportunities for leading businesses to deliver new levels of customer experience at every touchpoint. This requires companies to harness data smartly and seamlessly to drive loyalty, react in real-time to shifting demands and provide radical transparency across the value chain.
Here, we explore the five shopping trends defining the 2022 holiday season.
The holiday shopping season continues to evolve. This year, it will be longer than ever and characterized by peaks and troughs. About one-third of US shoppers plan to begin shopping sooner than last year, with 56 percent starting their holiday shopping in October.7
If last year’s forward creep into October was a result of pent-up post-pandemic demand, this year, it’s being driven by economic and geopolitical uncertainty. Many consumers are shopping earlier because they are concerned about increasing prices or product availability as the holidays approach.
Savvy retailers have started promotions much earlier in 2022 to meet this demand. However, what’s most interesting is the impact of early discounts on the rest of the holiday season. For businesses, the extended holiday period means that flexibility will be increasingly vital. Companies must glean insights from multiple data sources and analyze the right data at the right time to meet customer demands.
Doing so will also allow retailers to target the right channels at the right time – an integral capability this holiday season as the rise of social commerce diversifies where people spend. Young consumers are at the heart of this trend – using social media apps to discover and purchase products. Research from HubSpot reveals that 28 percent of US Gen Z and an equal number of millennials recently purchased on social media directly through the app.8
No matter when consumers begin their holiday shopping, expectations will arguably be higher than ever this year. The resurgence of in-store shopping requires businesses across all channels to step up their efforts to win the hearts and minds of customers.
Promisingly, digital Customer Experience (CX) solutions are enabling retailers to provide proactive, contextual and intelligent customer interactions. These solutions combine empathy and speed to meet and exceed expectations.
Customer expectations extend far beyond service. The ability to shop sustainably is vitally important to people when the need to combat the climate crisis has become increasingly critical. According to Deloitte, 39 percent of US consumers choose sustainable holiday gifts whenever possible.9 But with many shoppers finding it challenging to identify genuinely sustainable products, businesses can highlight these credentials throughout the holiday period.
With shoppers worldwide facing unprecedented inflationary pressure this holiday season, people are seeking to mitigate these challenges by trading down or shopping around to ensure the best prices. According to a survey, 81 percent of consumers in the UK have altered their shopping behavior in response to surging inflation.10 More than half of these consumers are switching to private labels. Consumers are increasingly buying from discounters due to value-for-money deals.
According to Future Publishing, a leading digital publisher, 42 percent of US shoppers expect brands to meet them halfway by reducing prices to encourage sales. However, more significantly, one-third of American shoppers want to see their brand loyalty rewarded.11 As price sensitivity grows, retailers are working to better support their customers with innovative strategies that maximize lifetime customer value.
These include new loyalty schemes that counter the effects of inflation through promotions on everyday items and emotional appeals that deepen relational ties. Elsewhere, across marketing, service and customer engagement platforms, businesses should strive to make shopper interactions more collaborative, human and locked into the realities of their holiday needs.
The onus is on retailers to deliver new levels of transparency, from real-time fulfillment updates to the provenance of products.
Consumer concerns about order fulfillment persist in 2022. According to Deloitte, 77 percent of shoppers in the US expect stockouts this year, up from 75 percent in 2021. However, 60 percent of retail executives are comfortable with the volume of holiday merchandise ordered.12
As leading retailers harness the Internet of Things (IoT) to drive innovation in their supply chains, 2022 represents an opportunity to push transparency beyond fulfillment. Blockchain, for instance, is enabling retailers to provide assurances and detailed information about the provenance of products. Research from WNS and Corinium Intelligence reveals that 47 percent of digital retailer leaders view blockchain as instrumental to their digital plans.
With economic pressures influencing buying decisions, customers are also leaning on expert advice for shopping. Herein lies an excellent opportunity for brands to reach out to cost-conscious shoppers. According to a consumer behavior study by Future Publishing, 94 percent of consumers will turn to expert content online to navigate rising costs, and 40 percent want expert product reviews.13
With 2022’s holiday season longer than ever, the ability to respond to shifting demand patterns across various channels will prove integral. Real-time reactivity, from dynamic discounts to personalized offers, can help drive holiday sales even further.
Where data collection would spark outrage previously, new studies suggest that consumer attitudes to privacy are changing. More customers are willing to trade personal data like previous purchases for more individualized online interactions, paving the way for retailers to create hyper-personalized holiday-specific offers.
Retention analytics solutions can enable businesses to drive engagement with new customers and build loyalty with existing ones by creating such offers. With a long holiday season ahead, setting promotions earlier holds the most promise in 2022, enabling retailers to harness early enthusiasm, build momentum and clear space for stock arrivals after Black Friday.
Season’s greetings and happy shopping!
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05 December 2022
21 November 2022
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