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Five Holiday Consumer Trends to Expect in 2022
What Consumer Habits to Watch for This Holiday Season
Fall is just around the corner, and most retailers are already gearing up for the holiday shopping season. From back-to-school shopping, Halloween to Christmas, the second half of the year is usually a significant consumer spending period. However, this year several factors could impact consumer spending.
Knowing which trends to watch for and planning your campaigns to maximize conversions is essential as a retail marketer. In a recent report, Salesforce said sales forecasts this year would be affected by rising gas prices, groceries, and other essential household purchases that will eat away people’s budgets.
At the same time, the continued impact of COVID-19 cannot be discounted. Long-standing consumer habits were upended as households scrambled to revise their spending habits during the recession. Although recovery is finally underway, businesses must look back at the pandemic to stay ahead of its lasting effects on consumer behavior.
Early bird shoppers
Holiday shopping will likely start much earlier this year. Compared to the last couple of years, when buyers tried to beat shipping delays and depleted stock, this year, people will be looking to take advantage of offered discounts as much as possible and get ahead of price hikes. The report stated average selling prices would likely increase between 8% and 12% for the remainder of the year.
In the Salesforce report, 37% of people surveyed in the US plan to start buying gifts earlier to get the best deals possible. Following the inventory crisis of last year, retailers now have too much stock, so to counter that, there will likely be a highly promotional season lasting through year-end.
Not to be a Scrooge, but….
The importance of shoppers getting a bang for their buck cannot be stressed enough. Nearly half of all consumers are expected to switch from their preferred brands to lower-priced competitors this year. More worryingly, some 31 million US shoppers are unsure if they will buy any gifts this year – making pricing and discount strategies even more crucial.
A McKinsey report showed that pandemic conditions had created a savings-oriented ethos in standard shopping behavior, encouraging trading both up (in households with an income >$100k) and down. Consumers across income groups are searching for low-cost packaged goods and retail options and opting for new brands and shopping methods to supply their essentials.
Thirty-nine percent of Americans have tried new brands throughout the COVID-19 pandemic, mainly seen in younger generations: 44% of millennial and Gen Z consumers opted for a new brand, while only 35% of baby boomers followed suit.
Driving growth with physical stores
While digital sales skyrocketed last year, consumers are expected to return to physical stores this year, possibly in more significant numbers than before. Salesforce noted there are opportunities for retailers with both physical and digital stories to grow faster than digital natives and e-commerce brands. Retailers with physical stores are predicted to grow online sales 1.5 times faster than those without, as 60% of digital orders are now influenced by the store.
According to McKinsey, the return to physical stores is also driven by consumers’ need to splurge on missed experiences. Their survey showed that 43% of respondents planned to splurge on apparel, shoes, and accessories. In contrast, most other respondents planned to spend on beauty & personal care, electronics, items for the home, out-of-home entertainment, and household essentials.
Sustainability is key
Corporate values have become more important to consumers, and in the Salesforce report, 83% of shoppers will seek out sustainable brands and products this holiday. In fact, after a company’s treatment of customers and employees, its environmental practices are the top factor influencing buying decisions, placing the importance of sustainability initiatives ahead of actions around racial and economic justice.
The rise of digital collectibles
Non-fungible tokens (NFTs), a digital asset representing something unique or scarce stored on a blockchain, have exploded in popularity this year. While it is still early days, Salesforce predicts half a million NFTs will be purchased from retailers and brands between November and December, with a potential total market value of $54 million. In line with this, retailers and brands are expected to test new ideas and capitalize on this trend.
How to optimize your promotional campaigns
So now that you know what lies ahead for the holiday season, how can you plan your campaigns to be more effective?
- Advertise during multiple holidays. Having crossover campaigns has a multiplying effect on awareness and conversion rates. Last year, a Pinterest study revealed that brands that ran campaigns during multiple holidays had a four-times higher conversion rate compared with brands that only activated during the Christmas period.
Additionally, brands who ran multiple activations targeting mini occasions within holidays such as ‘Friendsgiving’ parties or tree-decorating events saw a 45% increase in year-on-year median conversion rates. By comparison, brands that ran just one campaign during the holiday period saw a meager 12% yearly increase.
- Be brand specific. Buyer behavior is based on the brand. Consumers may plan for some purchases in advance and delay others – but this allows a longer lead time for marketers to plan holiday campaigns.
- Identity and control. The next step in the digital market is putting consumers in the driver’s seat by giving them the autonomy to manage their digital identities. While this is not a significant driver this season, the increasing popularity of NFTs and other digital collectibles stored on a blockchain makes it easy to syndicate consumer information. It also allows the data to be applied across various retailers and gives consumers more control over their online identities, which they can share with their favorite brands.
Keeping your finger on the pulse of consumer trends isn’t easy. Things change fast, and there’s a lot of information to sift through when planning your campaigns.
With Fuel Cycle’s Ignition, you’ll get helpful, workable, and predictive insights, so you know exactly what’s happening and what to do next. Our methodologies are customizable to fit your brand’s needs and generate clear recommendations so you can take immediate actions
- Caila Schwartz, “How Will Inflation Shape This Holiday Shopping Season? Here Are Our Predictions”, Salesforce, June 27, 2022, https://www.salesforce.com/blog/holiday-shopping-predictions/
- McKinsey & Co., The Great Consumer Shift: Impacts on COVID-19 on Consumer Behavior, (Fuel Cycle, 2021) retrieved from https://fuelcycle.com/ebook/the-great-consumer-shift/
- Chris Wood, “No matter the time of year, there’s a holiday you should be planning a campaign for”, MarTech, July 26, 2022, https://martech.org/no-matter-what-time-of-year-it-is-theres-a-holiday-you-should-be-preparing-for/