Why it matters:
- In a post-pandemic landscape, only 18% of consumers say they feel optimistic about their financial situation as they head into the holiday season, according to Accenture.
- While 59% of consumers say they expect to spend the same this holiday season as they did last year, nearly 30% plan to spend less in 2023.
- Consumers are looking primarily at price (76%) and value for money (64%) when deciding what to buy this holiday season, but 53% still say product quality is a top consideration.
Retailers and brands that can provide a rewarding experience for their shoppers, whether in-store, online or through strategic promotions, are poised to succeed during the final run-up to the holidays and beyond, according to experts interviewed by CO—.
Although consumers are feeling less optimistic overall about their financial situations, they’re still celebrating the holidays, early sales data indicate, although some may be searching for value and spending a little more carefully.
Consider the following tips from retail experts about how merchants can convince wary consumers to spend more of their shopping budgets with them, rather than with their competitors.
Elevate the in-store experience
Retailers may see more foot traffic in stores this season thanks to “BOPUS” (buy online, pick up in-store) shoppers: More than half of consumers surveyed in Accenture’s Annual Holiday Shopping Survey said they would opt to collect their purchase from a physical store rather than have it delivered if it would save them money.
This being the case, retailers would do well to offer an outstanding in-store experience to entice those shoppers to stick around and make additional purchases.
“Whether that's offering snacks or offering some other type of experience that is not normally there in the stores, [that] will entice consumers to want to be there,” said Jill Standish, Senior Managing Director of Retail at Accenture.
Lisa W. Miller, Founder of consumer insights consultancy Lisa W. Miller & Associates, agreed that providing differentiated in-store experiences can be an important way to woo customers going forward.
She has polled about 53,000 consumers since March of 2020 in an ongoing research project called The Journey Back to Joy, in which Miller tracks consumer sentiment via monthly surveys.
Last year's research found that consumers cited several advantages to shopping in store, including 57% who said they appreciate being able to see and feel the physical product they are buying, 41% who said they don’t have to wait for shipping, and 31% who said shopping in-store puts them in the holiday spirit and/or is “more fun.”
“Yes, deals are important, but it's all about reminding people how fun it is to be in the holiday spirit, and shopping with friends, and all of the traditions,” Miller said.
[Read: Retail Experts Share Tips to Reduce the (Hefty) Cost of Product Returns]
Leverage digital tools via livestream events to video chats
Based on last season’s insights, Accenture’s Standish said web-based tools can be used to drive sales both online and in-store. This can include livestream shopping events held directly from stores, she said, citing Nordstrom as an example. The upscale retailer has been livestreaming in categories such as beauty, home, and apparel since last year, and it has also run holiday-themed beauty trend shows with experts from big brands, including an appearance from makeup artist Charlotte Tilbury, whose namesake brand is sold at the department store chain, she said.
About half—51%—of retailers surveyed by Accenture in 2022 said they were planning to use a store as a livestreaming studio or to create a virtual shopping space especially for the holiday season.
“Similarly, Avon is using livestreaming, including video chat, live selling consultations and virtual services as a high-touch means of educating and engaging with consumers,” Standish said.
Promoting both in-store and online shopping via social media should also be considered as a part of a merchant’s strategy for driving sales, she said.
Focus on customer loyalty
Customer loyalty should be a priority for small businesses year-round, but it can be especially important during the holiday season. Accenture data found that nearly all retailers are working hard to encourage customers to shop with them this year with the following tactics:
Increased payment options (96%)
Improved shopping experiences (96%)
More promotional and social media activities (96%)
Discounted prices (95%)
Product availability guarantees (94%)
Loyalty programs are also part of retailers’ plans to increase purchase frequency, customer retention, engagement, and basket size throughout the holiday season and beyond.
“Retailers should focus on gaining a more nuanced, data-driven understanding of each consumer, to improve the shopping experience, build trust, and enhance loyalty, all while watching the bottom line,” said Standish.
[Read: Setting Up a Customer Loyalty Program for Your Business]
If people are browsing before they go to the store, having that visibility of what’s there locally [is key].
Jill Standish, Senior Managing Director and Global Lead, Retail, Accenture
Provide inventory visibility so that consumers know what’s in stock at their local store
After supply chain disruptions in the past two years impacted product availability during the holiday shopping seasons, both Standish and Miller said the importance of inventory visibility has become especially important.
That’s part of the reason consumers are favoring shopping in-store this holiday, Miller said. They enjoy the satisfaction of having the product in hand as they leave the store, rather than waiting to have it shipped and wondering if it will arrive on time.
Standish said providing visibility into store-level inventory to customers who are shopping online is also important.
“If people are browsing before they go to the store, having that visibility of what’s there locally [is key],” she said. “We've been saying that for a very long time, but that's just the basic requirement now.”
Consider demographic spending trends — and then market accordingly
Shoppers in various demographic groups are reacting differently to the economic conditions, and marketers should take these differences into consideration.
For example, heading into the holiday season, women appeared to be more cautious about their spending than men, Miller said. When she surveyed consumers about how much they planned to spend during the holidays, men reported plans to spend $54 more than last year, while women planned to spend $113 less than a year ago.
“If you happen to be in a category like jewelry, where men are going to be the primary purchasers, then I would definitely lean into that,” said Miller.
Accenture research also found stark differences among age groups. For example, while 36% of consumers said they planned to spend more on holiday shopping this year, only 8% of baby boomers said they planned to spend more, compared with 68% of older millennials. Boomers also said they expected to spend half as much as older millennials, about $492 versus $1,098, respectively.
Think strategically about promotions: ‘increasingly, consumers want value in the form of everyday low prices’
Research from Bain & Co., in partnership with ROI Rocket, found that sales and promotions aren’t necessarily the best way to attract consumer spending.
“In fact, a vast majority of shoppers say it’s most important that retailers deliver the best value for their money—and increasingly, they want that value in the form of everyday low prices,” Bain & Co. reported.
Some retailers have been limiting price increases on everyday purchases, the report found, while using promotions selectively to clear out excess stock. Bain cited Williams Sonoma as an example, saying the retailer has “unlocked value partly by eliminating site-wide discounts.”
Walmart, meanwhile, has also announced plans to keep prices low and offer additional promotions on popular gifts, the report said.
Miller said marketers should take a step back from aggressive promotions and think about the things that differentiate their brand in the market.
“The reality is that people have gotten comfortable sitting at home, and we’ve forgotten about the joy that brands give us,” she said. “If you just focus on all of these deals and offers, it becomes commodity[-driven]. At the end of the day, what makes your brand different? I think we've forgotten about that during the pandemic as marketers and business owners.”
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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