“A very human holiday” is how Jill Standish, global retail lead at Accenture, describes how consumers will approach the upcoming holiday shopping season.
Saddled with inflation, higher energy bills, the restart of student debt loan payments and a geopolitical world in turmoil, consumers are likely to pull back on buying stuff and, instead, focus on “what’s really important,” Standish told WWD. “Such as spending time with one another.”
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Of course, shoppers will still buy gifts this season, but consumers will be more frugal — and more nostalgic, too such as getting together to bake and cook simple meals and reminisce about holidays past.
Regarding the headwinds to spending, Standish said the restart of student loan payments is of concern because it is “basically taking money out of the system in terms of disposable income.” The freeze on payments lasted three years, and in that time, inflation soared. Standish said the combined impact of loan restarts and inflation is squeezing shoppers. The good news, though, is that the cooler weather that arrived late last week will likely put consumers in the mood to shop.
In its annual survey of holiday spending and its impact on retail, Accenture found that 17 percent of shoppers polled said they “feel optimistic about their financial situation going into the holiday season,” while 60 percent said they “are already — or are planning to — cut back on giving gifts to close family and friends due to budget constraints.”
And 52 percent of consumer respondents said they agreed not to exchange gifts with other adults. Accenture also found that 63 percent of consumers polled “intend to have few decorative lights to save money,” while 58 percent said they plan “to cook less elaborate meals due to costs involved.”
On the retail side, 66 percent of executives polled said “their profit margin targets for the 2023 holiday season are higher than last year,” while 45 percent of retail executives surveyed said, “increasing price cutting and promotional activities played a significant influencing factor in their plans for delivering the 2023 holiday season.”
As a result, Accenture said 48 percent of executives polled said they expect to increase markdowns and promotional activities to lure shoppers in. “This will come as good news for the 78 percent of consumers saying price tops the list of most important deciding factors in how they will shop and what they will spend more on this holiday season, followed by value for money (at 60 percent),” the report’s authors noted.
Other tactics retailers are deploying this season include focusing on the in-store shopping experience as well as shopping benefits. The survey found that 58 percent of executives surveyed said they “are planning loyalty programs and benefits for customers who spend a significant amount of money.” And 49 percent said they are focusing on discounting, while 48 percent are focusing on availability guarantees. Meanwhile, 50 percent of respondents said they plan to improve the in-store shopping experience.
Regarding the latter, Accenture found that 55 percent of retail executives polled “have undertaken extraordinary measures regarding the shopper experience and engagement this year to deliver the holiday season.” This follows the results of a prior survey that describes how shoppers “are starting to feel the effects of the cost-cutting and margin-protecting steps many retailers have taken this year.”
“This includes everything from reducing the size of products (‘shrinkflation’) to swapping out ingredients or components for cheaper options (‘skimpflation’) to declining customer service levels,” researchers at Accenture noted.
“One in three consumers have found it difficult to get help from customer service agents in the past year,” the report’s authors said. “Or even get through to someone to speak to in the first place. Nearly half of those surveyed by Accenture said poor customer service made them feel less valued.” The research also showed that 41 percent of consumers polled feel ignored by retailers regarding feedback, while 37 percent noted a decline in product quality.
Standish said another notable trend this year is a return to a “peak shopping season.” This is a reversal of prior years, where the holiday shopping season was more elongated. “Just 26 percent of consumers told us they had already started their holiday shopping by August, compared to 42 percent last year,” Standish said, adding that 65 percent of consumers said they plan to do their holiday shopping in October to December.
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