At the beginning of the year, we identified meta trends tied to the Great Global Restart – many of which held true in themes we witnessed and experienced throughout the year. We continued to wrestle with uncertainty juxtaposed with return-to-new-normal, scarcity with indulgence, and smaller circles with a greater desire to connect. As we head into an undoubtedly unique holiday season affected by the Great Resignation, supply chain challenges, inflation scares and perhaps even some revenge shopping, we offer a new trend outlook: how a tale of two economies will impact consumer spending, and how brands can come out on top.
A tale of two economies
This year of juxtapositions has underscored what became apparent in 2020 – two different economies exist for consumers today. While some consumers during this pandemic have relied on student loan forgiveness and stimulus checks, others have had the opportunity to actually increase their savings by working remotely, saving money usually budgeted for commuting, traveling, and dining out.
Because of this, we anticipate that this holiday season will be centered on hyper intentionality. When consumers choose to save rather than spend – whether by true choice or due to circumstance – they will be pridefully frugal. But when they do decide to spend, it’s likely to be on bucket-list worthy indulgences or impulse indulgences in the moment.
Brands who recognize the reality of the two very different worlds consumers are living in today and put a strategy in place to appeal to either – or even both, in some cases – will win this holiday season.
Creativity as currency
As we’ve all continued to reprioritize how we spend time and money, saving will be the new indulgence for some consumers this holiday season. Brands will engage these consumers through DIY craft hacks and helping them make their own homemade (or almost homemade!) gifts. Meanwhile, conscientious consumerism – and perhaps also supply chain challenges – will still drive people to shop local, artisan, and Etsy to invest in those made-locally-with-love gifts. In both cases, creativity will be king as consumers look to show caring through crafted gifts.
Impulse and indulgence
Parallel to a world of reduced spending and DIY, just as we saw in 2020, impulse spending has increased throughout the year. This is especially true online, driven by social channels where consumers are discovering and purchasing more than ever. Impulse buying this holiday season will range from smaller purchases driven by in-store promos and hot deals online up to big ticket items that consumers have decided to splurge on in an act of revenge shopping. These consumers have pent-up desire to spend as offices and restaurants reopen, and travel and events resume after spending months at home. Thus, we predict both micro-indulgences and impulse upscale indulgences will win this holiday season in both CPG and travel.
For CPG, we see micro-indulgences like crafted chocolates, premade handcrafted cocktails, locally sourced soaps and oils taking center stage. But the big impulse buys that support pandemic pursuits like high-end sports/outdoor equipment, VR goggles and top-of-the-line headphones for enhanced gaming, and luxury cookware are likely to see an increase as well.
In travel, micro-indulgences for consumers with small bubbles or budgets will look like one-day experiences and staycations – bundling the safe and close-to-home fun will be key. Winners will tie this trend to the desire to keep smaller circles together, creating packages for pods of 4 to 6 people.
Macro-indulgence will fuel consumers to jump on bucket list trips as travel restrictions ease. The key here will be to offer flexibility and confidence in cancellation while clearly communicating expectations on requirements and service levels ahead of time.
For both these areas, safety is table stakes, but the winners will follow our guidelines to make safety sensory – see evidence of frequent cleaning with proactive communication, smell clean rooms, hear safety policies being enforced, and touch clean surfaces throughout the travel experience.
Throughout the holiday season, brands that tell it like it is and bring their whole selves will dominate their respective spaces. In the era of trust in a world of truth decay, consumers are tired of trying to sort out truth from marketing. Transparency is key, and brands that unabashedly stand for who they are will win.
Now more than ever before, single-minded brand propositions are critical to reach consumers where they’re at and which economic reality they’re living in. Luxury goods and travel experiences will need to underscore their white glove treatment at every touchpoint. Indulgent foods and beverages should embrace full fat, full alcohol, rich flavorful decadence. At the same time, value brands and chains can fuel consumers’ dreams while still delivering the quality they need. Socrates had it right – the brand that knows thyself and acts on it will win consumers’ hearts and minds, especially in these unsettled times and parallel economies we’re living in.
Whether you’re in retail, CPG, financial services or travel, Magid’s Consumer & Commercial Brands group helps brands like yours solve their toughest problems. Let’s talk.