The economy is affecting holiday shopper behavior.
As the holiday season approaches, shoppers are increasingly adopting budget-conscious shopping strategies.
Algolia recently surveyed 1,000 U.S. consumers aged 18 and up to shed light on the cautious consumer sentiment prevailing in the market. The study revealed that 62% of respondents expressed concerns about the economy's impact on holiday spending and 38% said they feel financially worse off than the previous year.
In a tight retail market, great prices and customer experiences will be key to achieving success before customers bounce to a competitor's site. But first, retailers must know what trends to expect. The survey reveals how the modern American retail consumer is evolving, allowing retailers to glean insights for adapting their strategies in winter 2023 and beyond.
The Economy as the Grinch
For many shoppers, the economy casts a shadow over their holiday plans. This cautious outlook drives demand for discounts and bargains, as 77% of surveyed consumers say they're actively seeking cost-saving opportunities this year.
In addition, to manage the financial aftermath of the holiday season, 64% of respondents plan to implement a budget post-holiday, and 25% of respondents intend to rely more on layaway to manage their holiday expenses, indicating a longer-term impact on their holiday shopping
Upon analyzing how specific demographics plan to navigate the holiday season amid economic
instability, it appears women are opting for more pragmatic shopping lists. In fact, 68% of female respondents expressed concerns that the economy will affect their holiday spending, and 47% stated that they will spend less this year.
The Early Bird Gets the Deal
Consumers are shopping earlier this year, with 43% of respondents saying they plan to complete their shopping longer before holiday arrival than previous years. Algolia also saw a surge of early bird holiday shoppers on its search and discovery platform.
Upon examining search volume across its e-commerce customers, Algolia noticed the search for "Christmas" increased by 98.6% in August compared to July and 43.4% in September compared to August. This means "Christmas" searches on the platform surpassed 320 million
This holiday season, generational differences play a significant role in shopping behavior. Gen Z is the most inclined to indulge in lavish spending. 14% of surveyed Gen Zers are investing in luxury gifts, though, on average, just 6% of respondents are inclined toward luxury presents this year.
Their preference for high-end products could be attributed to their desire for unique and exclusive products and a sense of self-expression through luxury. On the other hand, millennials expressed heightened concern about the state of the economy affecting their holiday spending, with a significant 70% feeling apprehensive.
This concern could be rooted in their experiences during the Great Recession and a general awareness of economic fluctuations. Consequently, millennials may adopt a more cautious approach to holiday spending, focusing on budget-friendly options and seeking value for their money.
However, these two groups agree on one thing: great prices. Therefore, millennials and Gen Z lead the charge when shopping on critical holiday deal days like Black Friday. An impressive 82% of millennial and 81% of Gen Z respondents expressed eagerness to participate in Black Friday shopping events.
This shared enthusiasm is likely linked to their tech-savvy nature and affinity for online shopping, allowing them to access and compare deals on these high-traffic shopping days easily.
This holiday season is sure to puzzle retailers everywhere. Consumers are spending less, shopping earlier, and scrutinizing deals more than ever. Success in the retail sector hinges on the ability of organizations to tailor their strategies to meet evolving consumer behavior.
Offering competitive deals, focusing on notable shopping days, and emphasizing practical gift options are crucial tactics for retailers looking to navigate this unique holiday shopping landscape.
By leveraging advanced search technology, including personalized recommendations, retailers can create a shopping experience that resonates with customers, even in an environment of economic distress.