November 3, 2022 | 4 min read
Abby Long is the Senior Managing Editor at PMG.
The 2022 holiday shopping season is shaping up to be another perfect storm of consumer behavior shifts and unique challenges as economic uncertainty looms, yet consumer demand—and enthusiasm—remains strong. Across holiday forecasts, retail sales data, and consumer research, three trends are emerging as the driving forces defining this holiday season.
Inflationary Pressures: Inflation will have a significant impact on consumer spending and overall retail sales growth this season.
Pull Forward Effect: Holiday shopping has started earlier than ever, pulled forward by consumer behavior and retail discounting strategies.
Enthusiastic Shoppers: Despite inflationary pressures and economic uncertainty, consumers are showing resilience to unpredictable market conditions and are eager to return to in-person holiday celebrations and shopping in stores.
After months of economic uncertainty and fluctuating interest rates, rising prices and macroeconomic pressures will be the biggest factors influencing buying behavior this holiday season. Already, shoppers are shopping earlier in the year due to the risk of rising prices, and they are on the lookout for the best deals and cost-saving opportunities, remaining determined to stretch their dollars further to make the most of their holiday budgets.
Market research firm Numerator reports that nearly nine out of ten (89 percent) U.S. consumers expect inflation to impact their 2022 holiday shopping plans in some way, with 59 percent expecting that impact to be “moderate” or “significant.”
When asked to select the top factors influencing purchase decisions, 64 percent of respondents listed “value for the money,” according to PMG’s proprietary research conducted with YouGov.
Mintel reports that 75 percent of shoppers this season are focused on “finding deals due to rising prices.”
PwC reports that thirty-five percent of shoppers plan to spend more this holiday season than they did last year.
“People are increasingly looking to brands to play their part in mitigating the financial impact inflation is having on everyday life,” said Shelina Taki, senior director of strategy and insights at PMG. “Brands that are sensitive to the economic volatility and uncertainty we are currently experiencing, whether through thoughtful messaging or well-crafted promotions, will be best positioned to start or continue meaningful relationships with their target consumers.”
The holiday season is in full swing as consumer enthusiasm for the holidays, along with early mega-sales events and concerns about rising prices, pull the season further up the calendar.
Forty-two percent of survey respondents plan to buy their holiday gifts before Cyber Week (Black Friday - Cyber Monday), according to PMG’s proprietary research conducted with YouGov.
As shopping behavior spreads across the holidays, Adobe forecasts Cyber Week will draw in $34.8 billion in sales, just 16.3 percent of revenue from the entire holiday shopping season.
Morning Consult reports that 25 percent of those surveyed had already started their holiday shopping in September, with 35 percent of those people doing so specifically to avoid macroeconomic challenges like rising prices and potential supply chain issues.
While 2021 was shaped by supply chain disruptions, many retailers are now challenged by a stockpile of excess inventory and plan to offer steep discounts to help clear warehouse shelves and incentivize consumer spending throughout the entire season.
Target Deal Days, Walmart Deals for Days, and the Amazon Prime Early Access Sale hosted in early October served as early bird mega-sales events marketing the unofficial start to the holidays and kicking off the season with steep discounts across popular categories like toys, apparel, and electronics.
“The retail landscape has shifted in favor of the consumer, with consumer expectations quickly adapting to news that retailers are planning to promote early and deeply to clear inventory,” said Tim Lardner, VP of strategy at PMG. “As holiday browsing begins in earnest, we’re observing strong traffic to ecommerce sites by customers who are on the hunt for value and softer conversion for full-priced messaging. Retailers that are in a position to capitalize early by taking advantage of lower media costs and delivering value to customers—in messaging, via loyalty, or via discount—starting early may have a leg up on this year’s holiday push.”
After two years of muted holiday celebrations due to the pandemic, people are looking forward to the holidays and eager to return to in-person holiday celebrations and shopping in stores.
Consumers are looking forward to the holidays, with more than 90 percent of people planning to celebrate and shop during the 2022 holiday season, according to Numerator.
Ninety-six percent of people expect to do at least some of their holiday shopping in stores this year, according to Mintel.
Morning Consult notes that more shoppers will blend their holiday shopping across physical and digital channels, as 41 percent of survey respondents plan to shop both in stores and online this year.
“After two years of muted holiday celebrations due to the pandemic, people are looking forward to the holidays and eager to return to in-person holiday celebrations and shopping in stores. ”
Demand is expected to remain on par with prior years, while significant growth may be more difficult to come by as inflationary pressures tighten profit margins for retailers. Ecommerce sales will continue to grow in popularity, with Adobe forecasting online spending for the season will top $209.7 billion, up 2.5 percent from last year. In total, Forrester predicts U.S. consumers will spend one in four holiday retail dollars online.
Across consumer research and retail sales forecasts, all signs point to a holiday season characterized by unique macroeconomic challenges and consumer resiliency as people are eager to return to holiday traditions.