Redefining holiday shopping in adverse economies
With the holiday buzz in the air, consumers are playing tug-of-war with their wallets, seeking the sweet spot between holiday joy and economic reality. Recent AD.VANTAGE data suggests a notable decrease in holiday spending. As people adjust their budgets to accommodate the ongoing economic uncertainty, consumers are not eliminating their holiday budgets but rather reallocating their means.
A game of tradeoffs
Our recent data indicates a stark decline in holiday spending from June to October, aligning with broader consumer sentiments. During the earlier part of the year, consumers held optimism that by the holiday season they would be poised for a more normalized level of spending. However, the persistent economic headwinds mean that many shoppers are not ready to spend as they might have in a pre-COVID world.
Ultimately, it’s a game of trade-offs. Spending less on everyday essentials like groceries and utilities (down 6% and 8% points respectively when asked what they would be spending more money on), consumers have made efforts to reallocate enough resources to celebrate the festivities, but are unable to facilitate spending at the same level as years past. The analysis demonstrates a negative fifteen net score on expected personal spending and a negative fourteen net score on expected spending for loved ones since June of this year.
Nevertheless, this is not a universal trend. Significant disparities exist amongst consumer segments. Men, people with children in the home, and higher income households are prepared to maintain or even increase their holiday shopping.
Business strategies for the changing landscape
Despite the overall decline, businesses shouldn’t rate off the holiday season yet. To draw the attention of the still-spending segments, it’s crucial to be present and visible across all marketing channels, including social media, television, and email.
Moreover, positioning during this season may pivot away from the excess and luxury that are traditionally associated with holiday shopping. Many consumers may lean toward functional, affordable, and universally appealing gifts. Adding value and accessibility could make all the difference this year, making considerations such as sales offers and adaptable payment options crucial.
Brands that seize upon the opportunities presented by significant retail milestones like Black Friday and Cyber Monday – and offer value-adding promotions or pricing models that mitigate stress for buyers – could well navigate this transformation in holiday spending habits effectively. Ultimately, the key lies in understanding and accommodating the economic pressures consumers face while still offering them the joyous holiday shopping experience they seek.
If you want to gain additional key consumer insights or learn about AD.VANTAGE, email us at LetsTalk@magid.com.
