From snagging the best Black Friday deals to booking flights, the holidays can be very stressful for consumers. That has only been compounded over the last few years by the evolving COVID-19...
From snagging the best Black Friday deals to booking flights, the holidays can be very stressful for consumers. That has only been compounded over the last few years by the evolving COVID-19 pandemic, inflation, worries about gifts and other items being in stock, and more.
Consumers’ changing demands have pushed retailers and travel providers to dramatically change their business strategies. Airlines have needed to find ways to re-engage after consumers chose car travel over flights for safety reasons and retailers have needed to prepare for product shortages and increased online orders as supply chains across the sector continue to face challenges.
So how will things change again this season? Findings from this year's global annual holiday shopping and travel report from the IBM Institute for Business Value (IBV), polling 12,000 consumers across nine countries, gives us some clues.
Preparing for the “what if”s: Uncertainty around inflation, gas prices and supply chain is driving consumer plans
After a tough few years of COVID-19 driving consumers’ shopping and travel decisions, we’re rounding a corner. The report shows that the economy overtook COVID-19 as consumers’ biggest area of concern this holiday season – two in three surveyed reported saying they will be more concerned about the economy this holiday season than last year, and 59% said they’re less concerned about the COVID-19 pandemic.
The global research shows nearly half of consumers surveyed will spend less if inflation continues to drive price increases. If they’re forced to cut their holiday shopping budget, over 60% of consumers surveyed will cut the non-essential categories like apparel, footwear, jewelry, and accessories. If goods are not available due to supply chain issues, 41% of consumers surveyed say they will spend less – but 30% will spend more if they can find substitutions easily. And if gas prices go down, 35% of consumers surveyed will do more in-store shopping.
Consumers are making travel and shopping plans earlier but they want to keep their options open
The mix of rising prices and decreased availability of inventory mean that when consumers shop is just as important as where. Our study shows that 58% of consumers surveyed plan to start holiday shopping before November, compared to 44% last year, continuing the shift away from the traditional Black Friday start of the shopping season. Almost two in three consumers surveyed plan to pre-order this holiday season to get their products on-time with guaranteed prices. This is already playing out in the market, with major retailers starting to offer holiday sales as early as the first week of October.
At the same time, consumers are hedging their bets. Nearly seven in ten consumers surveyed will opt for brands or retailers that offer free cancellations, order changes, and returns and a COVID-19-safe environment this holiday season. These perks are often worth the price due to the continued worries around supply chain and product availability this season. Compared to last year, 59% of consumers surveyed will be more concerned about supply chain disruptions that could make holiday shopping harder or more expensive.
Travel is also an area where consumers are looking to get back to normal, while still mitigating any risk associated with potential price changes due to inflation and fluctuating gas prices. The study found that average travel demand will go up by 9% during the holiday season and 78% of consumers surveyed are planning to purchase their airfare before October (61%) or in October (17%).
Sustainability reminds top-of-mind for majority of consumers despite economic hardships
Consistent with last year’s report, sustainability remains top-of-mind for consumers globally. Thirty-seven percent of consumers surveyed said sustainability will significantly affect their decisions when shopping for the holidays compared to 24% in 2021. Twenty-nine percent of consumers surveyed will bundle multiple orders to help reduce carbon emissions, while 38% will avoid single-use plastics, and two in five will choose to shop nearby (42%) and buy products that are branded as being environmentally sustainable or socially responsible (41%). Notably, consumers surveyed are willing to pay an average premium of 41% for sustainable products, 34% for sustainable air travel, and 37% for sustainable lodging this holiday season.
With conversations about sustainability and waste reduction increasing around the holidays – from the tons of wrapping paper thrown away post-holiday to fuel and paper goods used by retailers to ship their products – retailers and consumers have an opportunity to be climate stewards and take action to make more sustainable choices this season. As more purpose-driven consumers look for new features and offerings from brands and retailers, businesses that identify provide customers with new opportunities to connect with their brands in supporting sustainability initiatives will be rewarded.
What does this mean for businesses?
In 2022, consumers are hoping to re-embrace holiday traditions they’ve had to alter for the past two years. Many are committed to celebrating, regardless of what the next few months might bring. But how they travel, where they shop, and what they buy could still be influenced by economic shifts or other forces of change. With even the best laid plans at risk of disruption, the retail and travel industries are taking notice. Those embracing the uncertainty and leaning into technology like hybrid cloud and AI will win loyalty and sales this season.
For example, today, Dallas Fort Worth (DFW) International Airport debuted Digital Iris, an IBM-powered, artificial intelligence solution designed to help improve the experience of travelers. Located in the airport’s terminal B, Digital Iris is touchless and elevates the customer experience with voice-controlled, on-demand answers to travelers’ frequently asked questions.
By embracing technology, improving delivery, and creating new experiences for their customers, companies across the travel and retail sector will be able to celebrate alongside their customers this holiday season.
The full study is available at: https://www.ibm.com/thought-leadership/institute-business-value/report/2022-holiday-shopping-travel.