With prolonged inflation, hiked interest rates, and an economic downturn, it’s no wonder consumers are feeling an increased amount of stress when making purchases or buying services. And with the holiday season upon us, many are rethinking their spending habits even more than they already were.
In fact, 60 percent of consumers say their priorities keep changing as a result of political, societal and economic turmoil, an Accenture study found. Shopping trends and economic uncertainty lead to changing consumer habits and perceptions. As such, consumer spending and inflation are the major drivers for retailers, and a careful understanding of both will benefit your customers and your business.
The Impact of Inflation on Consumer Trends
While some business leaders claim that an economic recession is already here, others predict a recession will not hit until next year. Regardless, today’s inflationary environment impacts sales, and an economic recession will only cause sales and consumer spending to decline further. Seventy-two percent of consumers in the Accenture survey said that external factors such as climate change, inflation, and social movements are impacting their lives more today than they did in the past.
Furthermore, recent data from management consulting firm Escalent shows that 42 percent of consumers feel confident that they’ll achieve their holiday shopping plans — down 24 percentage points from last year. And with only 16 percent seeing themselves spending more this year compared to 2021, 32 percent expect to spend less this holiday season.
What Current Consumer Habits Mean for Retailers
An inflationary environment and a looming recession have created cause for concern and strain for retailers. Lowered consumer spending and consumer weariness mean companies will see much lower end-of-year revenue.
With changing consumer habits and supply chain issues, many retailers are facing overstock on inventories that didn’t sell. Thus, many are moving toward massive markdowns. Some retailers are now defaulting to competitive promotions to deal with overstock, lowered consumer spending, and rigid sales goals.
3 Ways Retailers Can Plan for the Holiday Season
Despite the many challenges that come from economic uncertainty and a wary consumer base, retailers can utilize several solutions to help consumers overcome their pain points while also maintaining revenue expectations. Here are three ways retailers can cope with shifting consumer buying behavior:
1. Build momentum.
As a business with several products, you need visibility in order to convert. Lowering inventory price can help with conversions to some degree, but you won’t be able to attract more potential customers if your brand visibility remains poor.
Instead, you should focus on boosting your brand’s visibility to wider audiences and more potential customers. This might look like investing in influencer marketing or selling your products as a retailer on Amazon.com. As many retail competitors start their holiday promotions, it can be hard to stand out from the masses. So now is the time to get creative in your marketing strategy on how you build your brand’s momentum before the holiday season reaches full swing.
If everyone is employing the same tactics to attract customers, the way to make a difference is to be more visible. Something like flashy and personalized advertisements on contextual web pages in conjunction with special sales can create higher visibility. If you build momentum earlier, then pushing harder during the holiday season with the right strategy will be easier.
2. Look ahead.
With supply chain issues causing product shortages and shipping delays, retailers are facing several inventory-related hardships, especially amid the holiday season. One solution to supply chain issues is to order products earlier and plan ahead to avoid potential delays.
Spend more and be more aggressive during this time. You don’t want to fall behind and not have enough inventory the day before Black Friday. Start early and prepare long before your competitors so your brand is ready to cater to the needs of consumers.
3. Use visual selling to your advantage.
When looking at Christmas online shopping trends, you’ll see that the customer experience is everything. Retailers can woo customers with an excellent purchasing process and superb visual design. How your products are displayed and branded can make all the difference when a consumer is deciding between your product and a similar one that’s right next to it — especially with online retail. In the digital age, visual merchandising isn’t just window displays; it’s also the appearance on the screen that will sell.
For the holidays, visual selling can be simple. Take advantage of the festive spirit and create a visual experience that entices customers. This could look like a targeted Instagram ad featuring winter activities or a Facebook banner featuring people using your products during the holidays. Remember that visual merchandising must engage shoppers, reflect your brand, and push your consumers to make a purchase.
Retailers must give consumers a reason to choose them — whether it’s the special sales you can provide, a superior customer experience, or personalized advertisements. Don’t miss out on revenue because you’re doing the exact same thing you do the rest of the year or the same thing as your competitor. This season, think about how to wow your customers. They will thank you, and your bottom line will, too.
Jason Streiff is the founder and president of Streiff Marketing, an Amazon rep agency specializing in retail.
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