As the festive season rolls around, the buzz kicked off by Black Friday and Cyber Monday will continue. For many, the sales were an opportunity to snap up a great deal on coveted items. For the organised among us, it was a time to get a head start on holiday shopping. However, this year, we can expect the cost-of-living crisis to affect retail. In fact, our data at GWI shows that the majority of UK consumers (87%) say the rising prices will have an impact on their spending during the winter holidays. With this in mind, brands will likely have to work even harder this year to capitalise on the golden quarter.
So, what can retailers expect from shoppers this holiday year, and how can they use it to drive success across marketing, product, and business strategies? Let’s delve into the retail statistics and trends you need to know.
Consumers are reining in the spending this Christmas
Even during the most wonderful time of the year, rising prices will impact consumer spending in 2023, and people will even be tightening their belts when it comes to treating friends and family. Among those in the UK who say rising prices will impact their holiday spending, 34% are more likely to cut back on gifts for other people. And it’s not just retail that will be impacted. Of those who say rising consumer prices will impact their spending, 29% are more likely to cut back on nights out, eating out, or socialising, potentially meaning there’s less festive cheer – something brands should be sensitive to.
Despite less seasonal splurging, there will always be consumers who don’t initially plan to snap up deals in the sales but end up being tempted by discounts as the event draws closer. We know that different generations impulse buy for different reasons, and younger consumers’ standout reasons typically revolve around social media (like using a “buy” button), or getting recommendations from influencers and celebrities. Brands should implement these learnings into their seasonal sales campaign strategies if they want to win big with these consumers.
Play into the “lipstick effect”
The ongoing cost of living crisis is still impacting how people shop, but we’ve known since January that consumers still expect to spend more on occasions like the winter holidays. This could be because consumers expect higher prices, but it also serves as a reminder that consumers may not behave in the way brands expect.
Times of hardship also dictate what people buy. Looking at Black Friday trends in 2023, fewer consumers in the UK planned to make luxury purchases than they did last year but were looking to splurge on personal care items. This behaviour aligns with the “lipstick effect”, the idea that during times of economic instability, consumers cut back on higher-priced luxury items in favour of smaller indulgent treats. Just the kind of thing you can snap up in online sales. That’s the case in 11 markets too; fashion and personal care items are top-of-mind, while luxury items are much less of a priority.
Shoppers may feel they can’t afford or justify luxury purchases right now, but are still tempted by affordable indulgences to cheer themselves up. Even more so if these carry discounts in the seasonal sales.
Brands should try to resonate with holiday shoppers who may be cutting back on luxury purchases, but are still seeking small, mood-boosting treats at a reduced price.
It’s not all about online sales, physical stores remain relevant
Almost 1 in 5 consumers in the UK planned to do their Black Friday shopping exclusively online, marking an 8% increase on last year. But it’s not all bad news for the high street; many headed back to stores last year, and almost a third said they’d do an equal mix of in-store and online shopping this year.
It may come as a surprise, but Gen Z were the generation most likely to shop in-store on Black Friday this year, with 40% planning to shop mostly or exclusively in-person.
For online sale shoppers, free delivery is huge. It’ll be a busy time of year for returns and deliveries, so online shoppers want this experience to be as smooth as possible. Every retailer needs to manage both ends of the purchase process effectively, leaning on other delivery services where they can.
It’s key for brands to remember there’ll always be consumers who prefer online shopping, while others will prefer more traditional shopping methods. That’s why nailing the omnichannel experience is crucial.
Leisure and homeware products are the top planned gifts this year
With no shortage of reasons to make purchases at this time of year, what is it that consumers are looking for? Well, consumers who planned to only shop for themselves in the sales this year stand out for having their eyes on new tech, whether it’s a new smartphone or a smart device. They’re also tempted by a luxury purchase for themselves; a recurrent sign that, even in times of hardship, consumers aren’t completely writing off big-ticket items.
Consumers who planned to only buy gifts, on the other hand, lean more towards home furnishings and leisure or entertainment products.
The world’s been a stressful place over the last few years, and the holiday season can only make matters worse for those who are really struggling. In response, gift-givers are likely eyeing up products to help their loved ones unwind and de-stress.
With many stretching their budgets this year, home furnishings can be a cost-effective present that lasts for an extended period, making them valuable for both giver and recipient. Brands should embrace this type of messaging for more targeted advertising, by emphasising how shoppers can push their money further.
Ad messages around quality are also important throughout the festive season. Cost is undoubtedly a factor but not every business can afford to slash their prices, so it’s important not to underestimate the significance of quality.
So how do you nail your holiday marketing? Whether you’re a small business or a big retailer, it’s all about finding ways to give consumers more value for their money, and brands who emphasise these qualities won’t find themselves in a race to the bottom.
Consumers expect transparent messaging this year
Over 3 in 5 planning to celebrate the holidays say the rising consumer prices will have a big impact on their spending during the winter holidays this year. For brands, it’s not so much the fact this is happening, but more how they communicate it to their customers.
In the UK last year, popular retailers John Lewis, Tesco, and Lidl paired back their Christmas adverts and focused more on themes of sentimentality and kindness. These themes are still important this year.
In terms of messaging, most consumers expect ads to be informative by providing product information, but they’re also calling for transparency from brands. In the unsettled times we live in, some prices will go up, and brands should be upfront about that. Consumers don’t want any embellishment; they want a concise, value-driven story to help them understand why.
Companies need to give customers time to process this news and open up a dialogue; around 6 in 10 people want to be notified of a price increase at least one month before it happens.
The lesson here is that while cost is important, sensitive communication and discussing quality and value matter more to consumers – especially during the festive season.
Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.