Peak retail season is just around the corner, but ongoing supply chain problems and consumer inflation woes have made forecasting trickier than ever. The disruptions that caused empty shelves at the beginning of the pandemic triggered widespread over-purchasing, resulting in inventory surpluses that are now driving increased discounting as retailers try to clear shelves of old inventory. This downward pressure on profits has been further compounded by continuing shipping and manufacturing delays, high inflation, and skyrocketing cost of living.
So how can wireless retailers stay ahead of trends and plan for a successful shopping season? By knowing the market trends to watch and doing the work now to get ahead of whatever might come next.
2021 saw an explosion of retail activity as consumers hungry for a return to pre-pandemic holiday traditions drove an 8.5% total increase in holiday shopping revenue – the largest annual increase in 17 years. However, high inflation has left many consumers tightening their belts as they struggle to afford necessities.
According to a global consumer survey by Dynata. more than a quarter of consumers in the US and Canada feel burdened by debt (29% and 26% respectively). Nearly one in three (28%) are having trouble making ends meet, and more than half (53%) are struggling to afford basic needs, and two thirds of consumers (67%) have taken action to reduce spending this year. This stress is disproportionately felt by younger workers; Millennials and Gen Z adults were three times more likely than Gen X and Baby Boomers to have taken a new or second job to offset rising costs.
Given all of these trends, it’s no surprise that consumers report that shrinking household budgets will leave less room for holiday spending:
- 59% of US consumers surveyed said that they were stressed about holiday shopping because of inflation.
- Consumer’s holiday budgets have shrunk, with 73% saying they’re watching their spending more closely in 2022.
Deloitte has forecasted holiday retail sales growth of between 4% and 6%, reaching a total of $1.45 to $1.47 trillion this season, compared to a US increase of 15.1% in 2021. However, when you take inflation into consideration, those figures would represent a net decrease in holiday spending. In the first half of 2022, the US faced an average monthly inflation rate of 8.3% in the first half of 2022. Inflation numbers have been less severe in Canada, but still averaged 6.7% during the same period.
What can retailers do to get ready?
1. Invest in solutions to make their online shopping experience seamless.
The pandemic saw a seismic shift in shopping habits, with a massive 64.1% increase in e-commerce sales from 2019 to 2021. This year’s economic woes will only accelerate this continuing shift. Despite forecasted overall spending decreases, Deloitte projects a growth of 12.8% to 14.3% in holiday e-commerce sales.
The reason for this growth? New habits created in the early pandemic! While 2022 has seen shoppers returning to in-person shopping, two thirds (67%) of US shoppers surveyed in one survey had used BOPIS (Buy Online, Pick-up In Store) in late 2021 and early 2022, and 49% of those shoppers made an additional purchase while picking up their items in-store.
This goes to show that even amid shrinking spending, growth opportunities still exist for companies that invest in online customer experience!
2. Plan to roll out your best promotions early
As of September, 3 out of 10 US consumers in one survey had already started their holiday shopping, and 70% expected to start before Thanksgiving. This shift is part of why 2022 looks set to continue last year’s trend of overall decreases in BFCM (Black Friday/Cyber Monday) revenue. Insider Intelligence predicts that Cyber Five’s share of holiday e-commerce sales will decline from 16.9% to 16.4% – well below the 2019 high of 20.0%.
Nikki Baird, VP of Strategy at Aptos, had this to say about the shift to earlier holiday shopping: “With shoppers expecting inflation to continue through the season, they’re looking to spend earlier than ever, and may not stretch their budgets all the way through the traditional holiday selling season, so the retailers who have the best chance to appeal to consumers will roll out their stronger promotions earlier, rather than waiting until December.”
3. Be customer obsessed
The businesses that will have the advantage this holiday season are those that are able to maintain the loyalty of customers they already have through great customer experiences like timely relevant offers, personalization, and seamless online-to-in-store shopping.
One great way to convert searches to sales is Pointy, a part of Google. Pointy integrates with RQ to make it easier than ever to engage customers while they browse online for in-stock products near them, and drive traffic to your physical store.
This free 90-minute virtual keynote on Wednesday, October 19 at 11am ET will offer an unmissable overview of industry trends, 2023 forecasts, market disruptions, and key barriers the telecom sector is facing.