Holiday Season 2022: Customers are ready to splurge

A new survey by 麦肯锡 brings great news for retailers: despite the current economic turbulence, US customers are excited for the holidays - and ready to spend.

"Nearly 40 per cent of survey respondents say they intend to splurge for themselves or for others," says McKinsey, with 55% responding they are eager or excited for the shopping season, a jump from only one-third in 2021. But their shopping behaviour has changed, as customers are apprehensive about inflation and the cost of living crisis. According to the latest Consumer Pulse Survey, people are looking for better deals more than ever. They will also choose to buy in another store if they offer products for a lower price. Another finding is that 56% of the respondents would start their holiday shopping before the end of October instead of waiting for Black Friday and Cyber Week.

This shift in the shopping pattern is due to the concern about price increases for 52% of the respondents. They also worry about product availability (51%) and shipping lead time (42%). This might be related to the supply chain crisis we have experienced during the pandemic. As customers are very keen to gather with family and friends this year, they want to guarantee they will have gifts for everybody - including themselves.

Although 55% of customers are excited to go shopping this year, they are conscious of the economic impact of inflation: 72% of respondents expect to pay more for gifts. With the price tag in mind, 44% of consumers are chasing coupons or sales, whilst 43% would switch retailers for a lower price. US families have saved more than $4 trillion since late 2019; in spite of this, 74% of consumers "across all ages and income groups say they are trading down —mostly by adjusting quantities for essential goods and delaying purchases for discretionary goods."

There are reasons to be optimistic, but with a certain degree of caution. With the survey findings, McKinsey encourages businesses to:

• Adapt to their consumer: "retailers should focus on inspiring consumers with the right items at the right price and at the right time."
• Set earlier, wider-reaching promotions, with the advice of leveraging excess inventory.
• Allow for more purchasing flexibility, offering price match guarantee or flexible fulfilment options.

Overall, the survey shows that there are positive reasons to expect a good holiday season. However, as shoppers adapt to the new economic circumstances, so should retailers. Understanding the bigger picture and listening to customers have always been keys to guaranteeing business revenue. In 2022, the first holiday season after three years of gathering restrictions, the outlook is bright, but it is time to readjust expectations and match customers' demands with business needs.