Will the holiday season help to bring the sparkle back into our lives or will consumers have themselves a miserable little Christmas? Numerical data signals the latter. Research by KPMG shows that 85 percent of consumers are somewhat, moderately or extremely concerned about inflation ahead of the holidays.
With increased costs and supply and demand challenges affecting both business and consumers negatively, this is perhaps no surprise. Retailers know one thing for sure: People are worried. But they don’t know how to understand and address these concerns in detail.
To get into the “why” and the “how,” retail organizations need to delve into data that goes beyond the numbers and offers explanation and further context. Here’s where analysis of unstructured text data can help. For instance, research conducted by Relative Insight looked at 25,000 tweets relating to the cost of the holidays from both October 2021 and October 2022 to find out more.
Using comparative analytics to surface the differences between each data set, this year-on-year comparison helps to build an understanding of consumers’ specific concerns, the ways in which behaviors are changing, and what all this means for retailers.
Despair Over Rising Prices
In 2021, after a year of stay-at-home orders, tweeters were looking forward to the holiday season and spending extended time with their families after being separated for so long. They were 1.9x more likely to use language related to “contentment” and 3.8x more likely to use the word “grateful.”
The situation in 2022 is markedly different, with Christmas seen as a looming drain on money. Through analyzing online discussions, it’s clear this could impact all aspects of the holidays, such as travel and dining, not just gift-giving and shopping behaviors.
Consumers are saying that rising inflation and the resulting cost-of-living crisis is set to impact their holiday spending. They were 21.2x more likely to discuss “overspending” and talked about prices “hitting hard” infinitely more than in 2021 (indeed, this phrase didn’t appear in the 2021 data).
“Need to budget better and cut out unnecessary spending on luxury items and overspending at Christmas!”
“Recession is hitting hard.”
This is in stark contrast to 2021. While consumers bemoaned the expense of the holidays, they were more than happy to pay for goods. In 2022, retailers will need to get creative to deal with these new shopper challenges.
What Can Retailers Do to Allay Consumer Concerns?
In another study, conducted by Relative Insight in conjunction with shopper marketing experts at Golley Slater, text analysis uncovered some ways people are coping with the cost-of-living crisis. Retailers facing the possibility of a strained holiday shopping season can consider implementing some of the convenience and savings approaches that consumers are seeking.
- Technology adoption: The places where consumers are shopping have changed for good. Convenience, e-commerce platforms, pure-plays, quick comms and food service aggregators (FSAs) all saw accelerated growth as main street and big-box stores went into decline. Across the board, there’s even more widespread adoption of technology for practical use. Things like “try before you buy” filters on cosmetics, use of augmented reality to “dress up” in an outfit or furnish a room, and seamless, personalized online experiences are now commonplace — and expected. Consider adding or enhancing your tech-enabled shopper options to stay ahead.
- Discounts and cashback offers: Looking at the prevalence of certain words and phrases over the past 18 months provides a clear picture of consumer concerns. In the last three months of analysis (July 2022-September 2022), two key phrases made their debut: discount codes and cashback offers. What this means is that consumers are having online conversations about these topics much more frequently. They’re looking for ways to save money and were 20.5x more likely to exchange deals, offers and discount codes with one another than they were in the previous wave of the report (March 2021-March 2022). Depending on your business model, playing up loyalty programs and other money-saving offers to consumers can serve you well in this environment.
- Focus on women: The data shows that women are most affected by the cost crunch. On Twitter, people were 3.5x more likely to discuss that women are potentially more hard-hit by recessions and cost-of-living crises compared to men. “Women led the way through the pandemic and yet have paid the highest price: 1.5 million women lost their jobs in the first two months of the pandemic-induced recession.” (Twitter, September 2022) While most retailers have long known about the decision-making power of women in the shopping landscape, understanding their current mindset and reaching this important audience with the right messaging and offers during the holidays will be critical.
While the current environment presents a massive challenge for retailers and other consumer brands, a deeper, more granular understanding of audience feelings and behaviors can help to guide decisions. As retailers face their own set of rising costs, it may be difficult to simply cut prices, but there are some creative ways to resonate with audiences. By using techniques such as text analytics to clarify numerical data, retailers can start to gain a more holistic understanding of the needs of their customers.
Alister Houghton is the content marketing manager at Relative Insight, a provider of text analysis software that helps businesses generate objective customer, audience and market insights from qualitative data.
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