2022 has witnessed many economic challenges. Inflation is the top concern in shoppers’ minds this holiday. In a report by KPMG, 87% of surveyed consumers admit they are moderately or extremely worried about inflation.
In particular, the U.S. Bureau of Labor Statistics reported that consumer prices in September 2022 rose 8.2% from the last year. The figure is near the highest inflation level since the early 1980s, causing a sharp decrease in the purchasing power of average Americans. According to Moody’s Analytics, customers now have to pay $445 more each month to buy the same amount of goods and services as they did a year ago.
With prices going up for all products, U.S. customers have to recalculate their budget for gifts and whom they will buy gifts for. According to Salesforce, 51% of Americans intend to buy fewer gifts this year than in 2021, with the main focus on their family and close friends. Moreover, shoppers plan to purchase 8 gifts this holiday season, down 11% from 9 gifts last year, as reported by GiftNow. However, spending expectations increased 7% to $580 on average, implying customers have to spend more on a per-gift basis: $65 this year versus $60 in 2021.
Amid the intense inflation, Americans will opt for less-expensive gift categories, and shift their spending to budget-friendly stores. 58% of holiday shoppers claim that sales and promotions are important factors in making purchase decisions for gifts, as revealed by NRF and Prosper Insights & Analytics. Compared to last year, the number was only 46%, indicating that customers have become significantly more price-sensitive this year.
Retailers must adapt to the current situation by modifying their marketing calendars and promotion strategies to meet consumer demand. A useful approach can be launching holiday sales early or offering financing options like buy now pay later to support customers amid inflation and higher cost of living.
Besides, retailers should focus on selling the products that gift receivers love, such as gaming products, apparel or jewelry, and electronics. These categories will see a higher demand for Christmas, which need proper inventory replenishment and marketing activities to increase revenue.
In contrast, let’s take a look at the presents that Americans like least.