As the holiday shopping season gains steam, retailers are facing consumers who are worn out by inflation and concerned about a looming recession.
As a result, several recent reports show shoppers with a more frugal and cautious mindset this year as well as being more selective in what they’re buying. This behavior emerges as retailers face staffing shortages and anticipated fulfillment delays. There is some good news, though. A survey from American Express shows that shoppers are expecting to spend the same or a little more this year as compared to 2021. Of course, inflation is expected to drive up spending overall. Still, shoppers polled are optimistic and said they’re more thoughtful about what they are buying.
In the company’s latest Amex Trendex report, 64 percent of consumers polled said the holiday season is their favorite time to shop and said they are looking forward to making up for lost time this year, due to the pandemic, through holiday gifts, travel and celebrations. Over half (52 percent) of survey respondents reported canceled plans last holiday season.
With 76 percent of consumers reporting they plan to spend more or about the same on gifts and decorations this holiday season, travel, gift shopping, and other celebratory plans are in full swing. Still, as consumers move ahead, they told the company they want to “ensure they are spending time and money on gifts and experiences that matter.” Seventy-eight percent of consumers agree that they want to be more selective with gift shopping and 77 percent said they would spend more on a purchase if it meant getting the right gift.
As they consider where to find the “right gift,” 72 percent of consumers told the company they prefer to shop at small businesses during the holidays to get more personalized and unique gifts, with 77 percent of consumers saying they believe it’s more important than ever to support small businesses this holiday season. For 72 percent of consumers, supporting small businesses will mean dining out at favorite local restaurants.
Meanwhile, another 72 percent said they are looking for holiday gift options and discounts earlier in the year, with 53 percent of consumers reporting they have been saving credit card rewards for holiday shopping.
As the holidays drive a desire to celebrate, 59 percent of consumers surveyed shared they want to buy themselves a gift this holiday. Additionally, 58 percent of consumers said they want to start or renew a tradition of traveling during the holiday season, and 53 percent of consumers say they plan to take time off before or after the holidays to travel. Sixty-two percent of consumers agree they would rather purchase experiences as gifts for friends and family rather than material gifts.
In a survey of 1,000 consumers conducted by RetailMeNot, the savings company said in its report that the last couple of holiday seasons “have been a wild ride for retailers and shoppers alike. The pandemic, supply chain issues, staffing challenges, and shipping delays have all drastically changed the holiday shopping landscape, leading to unprecedented shopping season after unprecedented shopping season. As for the 2022 season? Another set of challenges is looming, with inflation driving up costs and economic uncertainty throwing shoppers and retailers alike for a loop.”
In contrast to the Amex data, RetailMeNot found that shoppers will be spending 8 percent less than they did last year — $725 on average versus $786 last year. The company said the top categories include gift cards, apparel, toys, food/beverages and electronics.
RetailMeNot noted that 85 percent of respondents said “they have been impacted in some way by inflation. Specifically, 41 percent of consumers were forced to reduce their overall budgets. Another 24 percent are tapping into their savings, and yet another 23 percent are prioritizing which bills to pay.”
To cope with inflation, the survey revealed that 51 percent of those polled said they’re buying fewer things this year, while 36 percent are using more coupons. Twenty-seven percent said they’re scaling back on gift-giving, while 24 percent said they’re spacing out purchases over time. Twenty-two percent of respondents noted they’re buying more used items this year.
Consumers are also shopping earlier, which echoes other recent shopper surveys. In the RetailMeNot poll, the company said about half of the respondents “plan to get started before Thanksgiving (traditionally the gateway to the holiday shopping season).”
The survey showed that 56 percent of respondents were closely eyeing early deals. And 53 percent were planning to shop on Black Friday, while 55 percent were doing so on Cyber Monday. And similar to the Amex report, 42 percent of those polled were planning to shop on Small Business Saturday.
Regarding electronics, a traditionally popular holiday gift item, Arris, a maker of composites, said in their report that consumers this season and in 2023 are “looking for the latest and greatest technology. More than half (53 percent) are looking forward to cellphone upgrades and new releases in 2023, that’s followed by 1 in 4 (25 percent) excited about laptop improvements and 19 percent anticipating updates in handheld video games.”
And with the metaverse being pushed by brands and retailers, 14 percent of consumers polled said they plan to buy a virtual headset. Overall, though, 40 percent of consumers polled said they have no plans to buy electronics.
Looking at staffing and workforce issues, research from Verint found that 60 percent of retailers polled said “they are challenged to find qualified candidates to staff their stores, while 45 percent are struggling to fill contact center and back-office positions.” Automation might be the solution.
“Faced with labor shortages and challenged to meet consumer demands for superior shopping experiences across numerous engagement channels, Verint says this year’s holiday shopping season may be a reckoning for retailers in realizing the new reality of the automation imperative,” the company said in its report.
The survey found that 94 percent of retailers polled plan to hire new workers for the holiday season, while nearly 30 percent said they do not have enough human resources staff “to handle the number of vacancies that need to be filled. Automation that helps retailers expand their organizational capacity to interview and qualify candidates can provide relief in this area,” Verint said.
Jenni Palocsik, vice president of marketing insights, experience, and enablement at Verint, said staffing shortages “in stores, in the back office, and contact center roles will challenge retailers in their efforts to provide exceptional customer experiences to satisfy shoppers during the busy holiday shopping season this year. Leveraging automation is absolutely critical to fill workforce gaps and create a connected customer engagement strategy of humans and bots.”
Other findings include that automation is either in place or planned for retail activities “such as tracking orders (81 percent), inventory management (81 percent), sending customized offers or recommendations (79 percent) and processing returns (69 percent).” Verint also noted 56 percent of those polled “currently have automation in place for customer support, and 21 percent plan to implement it while 23 percent don’t use or plan to use that type of automation.”
Verint offered several ideas to help retailers engage shoppers this year, which include leaning into private messaging and automation “to scale this highly personalized channel. Bots can automate the use of private messaging channels at scale for customer communications in areas such as customized offers and recommendations and returns.”
They also suggested employing “intelligent hiring solutions,” which can be used to streamline staff acquisition and assessment. “A virtual interviewing and hiring process creates an extra layer of evaluation by pre-assessing candidates and reducing the workload on HR and hiring managers,” Verint said in the report. “Intelligent hiring solutions that streamline the hiring process are becoming fundamental to talent acquisition strategies.”
Verint said another solution could be automating contact or service center operations. “By automating responses to common queries or deflecting conversations to FAQs or community forums, the pressure on human agents is reduced, leaving them free to handle more complex issues, as well as lowering the cost to serve and creating a more seamless customer experience,” the company said.