As we are generally entering the end of November, the annual shopping fiesta – Black Friday, is also approaching. All the retailers and merchants are preparing to gain more customers and more income at the end of the year. However, with the impacts of the continuous pandemic and the declining economic situation, consumers’ enthusiasm tends to change, and it is not easy for retailers to figure out their thoughts and tastes to better cater to the customers.
An online coupon-providing site CouponBirds has presented an article about how inflation will affect the shopping habits of consumers in the shopping seasons this year. The data is categorized according to the income level of consumers, and it shows that 45% of consumers with an income less than $50,000 a year think their shopping enthusiasm fades, while 34% of those who have an income of more than $100,000 a year think they will care less about holiday shopping this year. As their consuming enthusiasm is affected, their shopping strategies and behaviors change as well.
As shown in Forbes, 85% of the consumers showed their worries about this year’s holiday shopping because of the bad economic environment. Fewer consumers will put “gift” as their first choice for holiday shopping, and they tend to go for groceries, daily necessities, life supplies, and housing tools instead. With the boom in all categories of products, it seems that there will be an increase in the products with more necessities and a more friendly budget. Matt Kramer, KPMG Consumer and Retail National Sector Leader expressed that consumers’ behaviors reflect their reactions to inflation, “the affordability and value of products are going to be the most important factors for consumers, and they tend to pay more attention to the real essentials.” He summarized.
The impact of the pandemic is still very deep and significant today. In the first stages of the pandemic, the federal government made a set of relief policies to support the economy. This helps a lot because we all saw the store market soar, the unemployment rate fell, and consumers had more cash than before, which greatly stimulated consumption. But when this high consumption rate has also brought down supplies and made it become tight, the consequent rise in product prices has troubled many consumers. To offset unprecedented demand for goods and services, the Federal Reserve has raised its key interest rate to levels not seen in years. That has led to a slump in the stock market, stagnant house price growth, and a spike in interest rates on things like cars and credit cards.
An economist Andrew Hunter said, in a report of Capital Economics research and consultancy group, that “With the deteriorating global economy likely to weigh heavily on exports soon, and with the drag on domestic demand from soaring interest rates still spreading,” he suspected, “the economy is about to start to slow down. It’s just a matter of time.”
Sourced from a fourth quarter’s Holiday Retail Report by Washington State University’s Carson College of Business showed that a majority of college students don’t plan to shop for gifts on Thanksgiving Day (accounts for 83%) or Black Friday (77%). However, although their enthusiasm and interest continue to decline, most of them still think it would be worth shopping in stores because of the great atmosphere. These sometimes more reasonable prices (than normal time) can keep the local stores well run in business.
For better prices and a more convenient experience, young people prefer to shop online this year, which is also a challenge for in-store retailers. “But, despite these changes, we’ve found that many consumers feel holiday shopping will still provide a sense of normal during this unfamiliar holiday event,” said Joan Giese, clinical associate professor of marketing at the Washington State University’s Carson College of Business.
However, there are also other experts stating that the influence of the pandemic may be significant for a period of time, but it won’t be permanent. 74% of the respondents hope that they could go back to how they shopped before COVID. It is not surprising that around 50% of the respondents think that nothing but COVID has changed their shopping habits from in-store to online, and once COVID disappears, they will go back to their regular shopping habits and places.
Despite all the negative effects of the pandemic, Andrew Hunter also predicted that the shopping events this year will probably turn out to be the “last hurrah” for Americans’ spending frenzy before a bona fide economic slowdown unfolds in the coming year.
For instance, in Las Vegas, a Casino operator told investors last week that October 2022 is “the strongest month for Las Vegas in history” (quoted from PR Newswire), which is a clear sign of consumer enthusiasm in the midst of the current economic environment.
This year’s shopping season is surely facing a more complicated environment, and it is tougher than before for retailers while nothing can be exactly predicted. They are still figuring out the best way. However, “just making promotions and having significant markdowns can’t solve all the problems if they want to preserve at least some of their margins.” said Matt Kramer.