The Sentiment for the Holiday Season 2022
The key to build loyalty while ensuring profits for all retailers, regardless of the size, this holiday season is to be flexible to meet consumers in an omnichannel environment, as consumers, regardless of their income levels, plan of being extremely strategic with their purchases.
The consumer sentiment in preparation for the Holiday Season 2022 indicates that high prices, as a result of skyrocketing inflation across the globe, have holiday shoppers prioritizing their purchases, but it is not as dim as one could expect and there are some bright spots in the horizon as well.
Various data points that we gathered support the following: 1) lower-income families feel more confident heading into the holidays, 2) younger generations are embracing new retail formats, in what we call true omnichannel environments, and 3) with better optimization retailers do not anticipate “out of stock” issues we had witnessed last year as a result of severe supply chain challenges.
The key to build loyalty while ensuring profits for all retailers, regardless of the size, this holiday season is to be flexible to meet consumers in an omnichannel environment, as consumers, regardless of their income levels, plan of being extremely strategic with their purchases. Though inflation is not stopping consumers from being festive during this holiday season, it has certainly paved its way to the minds of people as indicated in the five-country online survey done in November.
Holiday season and inflation
How it looks across selected countries around the world
Despite inflationary concerns, for example, in UK alone, the total retail sales (online and in-store combined) during Christmas season is forecasted to reach 82.2bn British pounds making this the largest Christmas season ever. Driven by an average spending per head, which is expected to vary between just below a thousand British pounds in Northeast to nearly 1,700 British pounds in London. Another big economy in Europe, Germany, is forecasted to be in second place with combined online and in-store retail sales with roughly €84bn making it one of the biggest holidays spends in history there as well.
In US, on the other hand, the year-over-year growth of holiday spending is forecasted to be around 6%, which is in excess of 55% less than the year before, but 65% higher than the moving average of the past 10 years prior to Covid-19 outbreak. Consumers in US are planning on purchasing fewer gifts than in 2021 (nine vs. 16) and there is clear shift in spending towards experiences, which are up 7% year-over-year. Overall, US consumers plan to maintain spending levels year-over-year by prioritizing shared experiences and cutting back on the number of gifts purchased.
It will be a Holiday Season after all
Though the sentiments vary between countries and consumer profiles, there is reason to be optimistic. Retailers can capitalize on the positive signals by focusing on five key takeaways for the Holiday Season 2022.
- If retailers haven’t already done so, they should optimize their promotion timing as consumers have been ready to shop for the holidays already since Halloween in order to curb spending pressures.
- As consumers, especially Millennials and Gen Z’s, are embracing new omnichannel retail formats it is paramount to be connected across social media platforms but also through more unconventional digital channels as integrated DM.
- Front line is what makes the difference whether retailers season sales are a success, hence acknowledging and caring for those who often log in extra hours is pivotal. To get something, you need to give something else!
- Though much of the supply chain hurdles have been resolved as an aftermath of Covid-19, seasonal sales and peak times will always create concerns for those responsible for supply chain management. Prioritization and resiliency will help to counter unexpected events.
- Perhaps the most critical of all, as consumers are hit hard by inflationary measures and many need to make tradeoffs (you wouldn’t want to spend the Holidays without electricity for example), it is retailers benefit to have options for all wallet sizes available.
About the Author
Tiia Koskela-Helenius is partner at HKH Management Consulting and responsible for the Business Design Development & Innovations practice area.