Consumers Seek Comfort & Certainty in Holiday Spending
We’ve had an incredibly uncertain holiday shopping season. Inflation stubbornly remained high, and the supply chain still faces significant challenges. Things were looking better at Thanksgiving on the public health front, then December brought the beginning of the Omicron wave and consumers spent the holiday week searching empty shelves for at-home rapid tests. But COVID didn’t steal Christmas, at least for retailers anyway. Consumer spending for the holidays rose by 8.5% over 2020, according to Mastercard’s SpendingPulse survey. It was the biggest jump in 17 years, and outpaced inflation.
So with inflation eating into paychecks and a resurgent pandemic, what got shoppers to open their wallets wider than before?
Comfort & Certainty
People weren’t deterred by higher prices, shortages, or rising cases because they wanted a return to normal and to seize some certainty in an uncertain time. When our confidence is low, our focus is on the me, here, and now, as William & Mary economics professor Peter Atwater told us for our Facing Fear research. Shoppers just really want to have something good and normal during a tough time, whether that’s a new tech toy to play with, or a smile on their child’s face. It’s shopping as a means of escapism.
And the pandemic’s effect on online spending shows no sign of abating. Online holiday spending is up 61.4% over the pre-pandemic 2019 season. As we wrote before in our Hyperdisruption piece, the shift from in-store to online sales has been in the works for years, but the past two years were an accelerant. The ecommerce sector is unlikely to cede much of its gains.
Another key factor boosting holiday sales is that the pandemic continues to suppress consumer demand for in-person services, allowing shoppers to channel more of their spending power towards goods and retail. That’s not welcome news for sectors that have borne the brunt of the pain over the past two years, but it isn’t a dynamic that will change until public health markedly improves.
How to Cope
So how should brands and retailers respond to shoppers acting with a mindset like this? Think about these points:
- Shoppers seeking comfort and convenience are less likely to jump over barriers to purchase. Optimize your buying experience to make it easy for them to spend with already-open wallets.
- Certainty is a hot commodity with shoppers. If you make promises regarding product quality, shipping and delivery times, or customer service, you need to give the shopper reason to be certain that you’ll keep them. When people are uncertain, they scrutinize more deeply for flaws.
- Empathize with your customers. They need to feel as though you’re on their team and understand their struggles. Your topline numbers may make it seem like these are the Roaring 20’s again, but shoppers just aren’t in that mood. Read the room before you publish your marketing copy.
We’re committed to helping brands navigate 2022’s challenges and prepare for the next big spending season. If you’re interested in learning how, we’d love to talk.
Clayton Southerly is the Marketing Communications Manager at Alter Agents, a strategic market research consultancy based in Los Angeles. He works with a team of super-smart researchers to translate data into actionable recommendations, build products, and get executives excited about insights that help them reach their target audiences. When he’s not building comms strategy and creating content, Clayton enjoys sitting on the beach, cooking, and traveling.
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