Shopping during the holidays is an activity some loathe and others yearn for, but almost everyone has to endure. This year comes with the fear of high inflation, a swath of layoffs, and a darkening economy. Overall, it may or may not lead to less spending, but it will undoubtedly change how consumers shop. According to ICSC’s Thanksgiving Weekend survey, 81% of respondents said the rising interest rates are likely to impact their shopping behaviors or payment methods during the Thanksgiving weekend, whether spending less, using cash or taking advantage of deferred payment methods.
That said, shopping in person is still a preferred option, and one may even argue that having a physical presence will be an advantage in this economic climate.
Shopping in person is still the preferred option.
According to ICSC’s Thanksgiving Weekend survey, 75% of shoppers say they’ll visit a retail shopping center during the holidays. This distribution isn’t much less than the overall US physical retail spending for the 3rd quarter of 2022, which, according to the US Census Bureau, was 85% of total retail sales. Historically, that doesn’t change much during the holiday season.
Regarding actual traffic to stores, Placer.ai has found that although retail foot traffic was down week-over-week in September, it started to increase in October, indicating an increase in demand leading up to the holidays. It is tracking lower than 2021 but may still surpass it on Black Friday. There’s no surprise that the economy may impact spending and traffic, so retailers must work extra hard to attract shoppers to their stores.
Due to inflation and rising costs, deals and positive store experiences are vital.
One way in which retailers can attract shoppers is through holiday deals. According to the ICSC survey, 61% of shoppers agreed that higher prices make deals more influential. Another way is through the overall store experience. With costs increased, the quality of the shopping experience is far more critical. “At a time when global inflation has become one of the biggest issues facing consumers, leaving them with less disposable income, maintaining ‘share of wallet’ is critical for retailers,” said Jenni Palocsik, Verint’s VP of marketing insights, experience, and enablement. “Creating exceptional experiences should be at the heart of every retailer’s engagement strategy. And our study shows ‘to the retail customer experience victors, go the spoils.’”
A positive experience is necessary both online and in-person, but a quality in-store experience usually leads to higher spending. Historically, many retailers have attested to the higher order values in-store versus online.
Having a physical presence carries a unique advantage in this economic climate.
Display in the Bearaby pop-up in Whalebone.
Courtesy of Bearaby
It’s possible that having a store may be advantageous during this time. Stores can allow consumers to connect with brands on a more personal level. It may even build loyalty, limit price elasticity, or increase spending.
Many digital brands have stores and provide quality experiences during the holiday season, but digital-only brands also choose to open holiday pop-up stores. For example, Harry Styles’ Pleasing lifestyle brand has opened a few pop-ups in London, New York, and Los Angeles. Also, Bearaby, the stylish and sustainable weighted blanket brand, has opened its first pop-up in Whalebone on Bleeker St in NYC, where it plans to host happy hours, a movie night, and an adoption event with Muddy Paws. Another relevant example is Rakuten, which had a two-day pop-up just last week where it offered cash-back to shop various brands. These pop-ups are a great way to attract shoppers during this time.
More than ever, brands must create meaningful experiences to lure holiday shoppers. People are hesitant to spend, but if the value of shopping goes beyond the transaction through deals and quality in-store experiences, shoppers will likely show up and feel compelled to make purchases.