Consumer trends in this year’s holiday season will be a mixed bag for merchants.
Global economic pressures—higher prices and borrowing costs in the face of slowing economies—are likely to hit all regions of the world. Because of this, bargains and discounts will be the name of the game as shoppers are more wary.
The good news is that supply chain issues are mostly in the past, and pandemic restrictions are less widely in force. Overall, consumer holiday spending is expected to be on track for continued growth. Consumers are likely to choose to save on everyday items, like dining out or ordering takeout, but they won’t slash their holiday budgets1 despite the fact that a full 40% said they were very concerned about inflation.2
But the impact of COVID-19 continues to live on. Pandemic-related preferences—the love of e-commerce, consumer desire for earlier holiday shopping and a boost in mobile commerce—are all expected to continue a multiyear trend upward. With these realities, card-not-present transactions, the use of digital wallets and an array of trends—such as buy online, pick up in-store (BOPIS), contactless payments, free shipping, easy returns and tap-on-mobile transactions—each of these is expected to affect global merchants. And watch out for a new trend: Santa bringing NFTs down the chimney.
In all, here are six key trends expected to impact holiday shopping.
1 Early holiday shopping is no longer an anomaly
Earlier holiday shopping is now a permanent shift in consumer behavior, and merchants and retailers should be prepared to start promotions sooner this year. Early shopping is often fueled by events such as Amazon Prime Day back in July, which is leading consumers to extend their holiday shopping over a number of months.
Much of this trend is accentuated this year due to inflation, as one survey revealed that 42% more shoppers worldwide and 37% more in the U.S. plan to start buying gifts earlier.3 That compared with 31% of U.S. shoppers last year, who began their holiday shopping as early as June, according to a Google survey.1
In-person Black Friday and Singles’ Day-fueled shopping in China still play a large role, but many gifts will be purchased long before then. Alibaba announced a pre-shopping day ahead of November 11 Singles Day, giving consumers the opportunity to place early deposits on items before final payments are due.4 And the concepts of late November’s Black Friday and Cyber Monday, for example, are shifting weeks earlier, particularly as Amazon has added a second Prime Day to its October calendar for 15 countries: Austria, Canada, China, France, Germany, Italy, Luxembourg, the Netherlands, Poland, Portugal, Spain, Sweden, Turkey, the U.K. and the U.S.5
Shoppers are also looking for more discounts and remain concerned about potential shipping delays.6
2 The rise of omnichannel is here to stay
Shoppers are sticking with a mix of channels post-pandemic, and retailers will need to accommodate consumer preferences to stay competitive. Consumers want to choose from various fulfillment options, including pickup in-store, local home delivery, curbside pickup and easy shipping.7
Retailers that offer both brick-and-mortar and digital shopping can grow at a faster rate than digital-only brands.3 And, as physical stores play a significant role in holiday shopping, retailers that can provide different shopping experiences will also stand out. For instance, U.K. tech retailer Currys recently launched an expansion of its omnichannel retail services that encompass both in-store and digital shopping experiences.8
Investing in digital transformation to create more comprehensive omnichannel experiences will remain a priority for retailers that want to fulfill customer expectations.
3 E-commerce remains a significant source of growth
Retail e-commerce sales remains a significant growth center for merchants of all sizes. One recent report predicts that online retail sales will reach $1.07 trillion in 2022.9
Secure transactions are a key priority for shoppers, and their trust in merchants is eroded if they’re not confident that their information is safe. One survey showed that 62% of consumers consider protecting their data and cybersecurity a top element of trust in business.10
Merchants can leverage advanced security measures and tools that can secure card-not-present, remote and mobile transactions.
4 Mobile commerce in e-commerce is key
Mobile commerce has become a critical channel for success in retail sales, and it’s no exception for holiday shopping. Research shows that In APAC countries, 2021 mobile commerce sales represented more than 50% of total e-commerce in all included Asia-Pacific countries, while m-commerce sales in South Korea are projected to reach 76% of e-commerce sales by 2025.11 Mobile retail e-commerce sales in the U.S. are expected to exceed $432 billion in 2022.12
Meanwhile, the global surge in cross-border e-commerce sales is also being fueled by m-commerce sales. A recent report projects that global cross-border e-commerce will reach $2.1 trillion in 2023,13 thanks partly to the rise in m-commerce with the rapid adoption of smartphones in markets around the world, including in emerging economies.14
5 Personalized shopping experiences are in high demand
Consumers are now demanding personalized shopping experiences to enhance their shopping journeys, including in online and e-commerce channels. Amazon India added a new dimension to the customer shopping experience during the Amazon Great Indian Festival, with Amazon Live. This live commerce feature gives shoppers the opportunity to engage with influencers and celebrities in real time while shopping.15
Retailers can increasingly use data and insights to create more personalized engagement with customers. The increase in online transactions and digital transformation has resulted in a dramatic increase in the volume of consumer shopping and engagement data, such as browsing behavior and cart abandonment metrics.16
Personalized service has become so important that 82% of customers are willing to share some of their personal data in exchange for a customized experience, one report said.17 Merchants can also capture more brand loyalty with their customers through personalized loyalty and rewards programs, as well as providing one-step Click-to-Pay checkout convenience.
6 More retailers are leveraging immersive web tech and NFTs
Among the newest hot trends for shoppers is the appeal of virtual products, including non-fungible tokens (NFTs) and experiences, such as immersive web technologies. The trend is particularly growing in certain demographics, and more brands are moving to take advantage.
About 60% of Millennials want to buy real-life products in virtual worlds, while 64% of all consumers have purchased a virtual good or taken part in a virtual experience or service in the past year, according to research from Accenture.1 Brands are creating products that can be sold as physical products in the metaverse and are also capturing attention from Gen Z consumers, who want a connection with their favorite brands.18 European brands are connecting directly to Gen Z and Millennial consumers in virtual gaming worlds such as Fortnite and Minecraft, where 39% of young Western European consumers are shopping for digital products.19
As merchants look to stay on top of the hottest trends, some augmented reality features with seamless payment options might be the next important feature.
1 Retail TouchPoints, August 2022. “5 Must-Know Predictions for Holiday 2022.” Viewed 4th October 2022.
2 Kantar, July 2022. “Inflation’s evolving threat to shoppers and the economy.”
3 Salesforce, June 2022. “How Will Inflation Shape This Holiday Shopping Season? Here Are Our Predictions.” Viewed 4th October 2022.
4 The Drum, September 2022. “Alibaba launches presales ahead of Singles Day to bolster sales as retail market slows.” Viewed 4th October 2022.
5 CNN, September 2022. “Amazon puts a second Prime Day sale on the calendar.” Viewed 4th October 2022.
6 Radial, June 2022. “5 Holiday Shopping Predictions for 2022.” Viewed 4th October 2022.
7 McKinsey & Co., July 2022. “E-commerce: At the center of profitable growth in consumer goods.” Viewed 4th October 2022.
8 Charged, September 2022. “Currys boosts omnichannel experience with better connected service.” Viewed 4th October 2022.
9 Retail Dive, July 2022. “Report: E-commerce sales to exceed $1 trillion this year.” Viewed 4th October 2022.
10 PwC, 2021. “The Complexity of Trust: PwC’s Trust in US Business Survey.” Viewed 4th October 2022.
11 Statista, March 2022. “Mobile commerce sales as a share of e-commerce in the Asia-Pacific region in 2021 with a forecast for 2025, by country or territory.” Viewed 4th October 2022.
12 Forbes, May 2022. “3 Mobile Commerce Trends That Are Dominating 2022.” Viewed 4th October 2022.
13 CardNotPresent, April 2022. “Cross-Border E-Commerce Sales to Exceed $2 Trillion in 2023.” Viewed 4th October 2022.
14 PYMNTS, January 2022. “Merchants Forced to Adapt Payments Systems as X-Border Mobile Commerce Soars.” Viewed 4th October 2022.
15 The Economic Times, October 2022. “Amazon India launches live commerce feature during festive season sale.” 4th October 2022.
16 McKinsey & Co., July 2022. “E-commerce: At the center of profitable growth in consumer goods.” Viewed 4th October 2022.
17 PwC, 2022. “Creating loyalty in volatile times.” Viewed 4th October 2022.
18 National Retail Federation, August 2022. “Disruption is not destruction — Mitch Joel urges retailers to ‘enter the nexus’.” Viewed 4th October 2022.
19 YPulse, June 2022. “Western European Brands Are Reaching Young Consumers in the Metaverse—Here’s How.” Viewed 4th October 2022.
The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.