Consumers Rethinking The Holidays - Here's What It Means For Advertising
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IBM released its annual global holiday shopping and travel report on Monday, revealing how people plan to travel and allocate their holiday shopping budget this season. Plans are being influenced by sustainability, and fears related to the economy and the COVID-19 pandemic.
Influence also will come from a variety of media such as search, video and connected television (CTV).
Shifts in shopping behavior, climate, and other factors will have an effect across supply chains, travel plans, and purchases — online and in stores. Businesses are looking toward technology to support an improved customer experience, as consumers hope for the best while preparing for uncertainty.
Some consumers are rethinking their holiday wish lists in response to the changes, while others said they will get creative to buy everything they want.
One thing is certain -- brands and retailers need to understand what consumers see as non-negotiable, what they’re willing to pay more for, and what people with the most purchasing power expect to prioritize.
IBM Institute for Business Value (IBV) surveyed more than 12,000 adults across nine countries — Brazil, Canada, France, Germany, India, Mexico, Spain, the United Kingdom and the United States — in August 2022, to gain a better understanding of the changes.
Shopping budgets this year will rise 8% compared with 2021 — in line with Bain & Co. economic growth forecasts for this holiday season of only 7.5%, which drops to between 1% and 3% when adjusted for inflation.
Holiday travel budgets are up 49%. However, price increases should be taken into consideration, particularly in the last few months since this study was completed.
Some 66% of consumers say they are concerned about the economy, and 59% worry about supply-chain disruptions that could make holiday shopping difficult or more expensive.
Consumers are also focused on environmental issues. Some 55% say they will be more concerned about sustainability this year than last year, followed by 42% say they are concerned about air travel disruption.
Overall, consumers are willing to pay extra for sustainability. On average, they say they would pay a premium of 41% for sustainable products, 34% for more sustainable air travel, and 37% for more sustainable lodging this holiday season.
To better understand the buying behavior of individuals and what will influence holiday purchasing decisions, IBM took a holistic view of consumer household finances. '
By analyzing changes in income, debt, expenses, and contributions to savings and investments, IBM identified four groups of consumers with different financial circumstances.
The Secure plan to spend 2.8 times more on goods and services than The Strained, and 6.5 times more on travel. On average, holiday travel budgets for The Secure are up 113% from 2021, hitting almost $6,000.
In the U.S., The Secure plan to spend an average of $22,000 on holiday travel alone. Some 86% in The Secure category plan to purchase holiday air travel, and 76% plan to start their holiday shopping before November.
There is more time to reach The Insulated, with 54% plan to shop for the holidays between October and December. Almost four in 10 plan to book their travel in the same time frame.
The Insulated also made significant budget increases for shopping -- 30% -- and travel -- 26% -- his year, giving them the opportunity to spend more with the brands and retailers they choose.
Due to expectations of supply-chain disruption and price hikes, 63% of shoppers are pre-ordering this holiday season to get products on time and with guaranteed prices. This approach is most common with The Secure, 84%, as well as individuals between the ages of 25 and 39 — about 73% — and ages 18 to 24 at 70%.
The Secure also are prepared to spend more to cover increased expenses this holiday season, while others plan to pull back.
