The future of holiday shopping – what does the research say?

Retailers need to get ready for a new type of shopper this holiday season – US consumer survey reveals

In July 2022, Radial, a bpost company, released the results from its US consumer survey. In the survey, Radial predicted that many consumer habits that were acquired during the pandemic will stay. The survey also predicted that during the sales growth in 2022, the peak season is likely to be moderate, especially compared to previous years.

Radial pointed to a new type of shopper that has emerged from the COVID-imposed restrictions and challenges over the recent years – the hybrid shopper. Post pandemic, consumers have normalised pandemic-inspired retail order and fulfilment options, leading to the emergence of the hybrid shopper.

A hybrid shopper seeks out convenience, flexibility, price, and speed of delivery when making purchases, utilising omnichannel fulfilment options. The hybrid shopper is more willing to try new brands or products due to products being out-of-stock or extended delivery timelines, and brand loyalty is less important to them than getting their product in hand. The new type of consumer flows seamlessly between e-commerce and brick-and-mortar options – moving across channels throughout the buying lifecycle.

Beyond the deep dive into hybrid consumers, the survey highlights also provided posts with advice:

  • Provide multiple fulfilment options
  • Don’t assume you know generational differences. Radial’s survey found that 24% of Gen Z (18-25 year-olds) shop less online than they did in 2020—which may mean that this generation is seeking out in-store experiences to break the pandemic isolation. Millennials are the most active online shoppers (19% shopping daily and 44% shopping several times a week) and Baby Boomers are the least active, with 49% shopping once per month.
  • Be aware that inflation is not changing spending habits for everyone. Those in income brackets up to $25K per year are least likely to change their spending habits, as are those with incomes over $75K. Those with incomes of $50 – $75K were the most likely to change their spending habits due to inflation.
    But shoppers are also finding ways to mitigate costs:
    • 34% have delayed less-important purchases while focusing on more important ones
    • 25% have bundled online purchases for free or reduced shipping
  • Focus on diversifying your supply chain. While millennials are the group which has the most active online shoppers, they are also they least loyal with “67% willing to switch brands due to delays or out-of-stock items”.
  • Improve delivery times to gain loyalty. Overall, the pandemic introduced slower processes and a need to wait longer as COVID policies slowed things down. While many shoppers have adapted to this, many still feel there’s a threshold as to when “slow” is “too slow”.
    The survey showed that 50% of respondents expect delivery in 3-4 days while 27% expect delivery in 1-2 days.

Q3 2022: New Zealanders’ spending healthy, but some shift from online back to offline

In October 2022, NZ Post published their quarterly market data analysis article called “The start of a new era?”. The article claims that despite the economic conditions, total spending on physical goods - online and in-store - was $13.7 bn for Q3 2022, up 15% compared to Q3 2021, and 16% up on pre-pandemic Q3 2019.  Even adjusted for inflation, these are healthy levels of growth.

Sector view

All sectors experienced a decline in online spend when compared to Q3 2021. Department, Variety & Misc. Retail Stores (24% decrease) were the fastest declining sectors compared with Q3 2021. This is a sector with many large multichannel retailers who have a significant nationwide physical footprint. Potentially this result suggests a shift from online to instore for the sector.

Clothing and Footwear (17% decrease) and Homewares, Appliances and Electronics (14% decrease) had the next highest levels of decline.

Peak season ahead

Big shopping events in New Zealand (Click Frenzy, Singles’ Day, Black Friday and Cyber Monday) which lead into the Christmas peak shopping period are coming up, and this will see online spending increase compared to the previous quarter. NZ Post do not expect this peak to be anywhere near as high as the record levels seen in 2021 – a decrease in online spend up to 5% YoY is expected.

Regardless of where the year ends up, the biggest opportunity for online retailers is capturing their share of spending in this upcoming Q4 peak, especially around the big sales events. NZ Post published a list of tips for e-commerce businesses to make the most of event days.

Staying Ahead of the Downturn: consumer study by Dynata indicates even tougher times ahead for consumers

Another consumer survey, by global research agency Dynata, paints a dim picture for overall consumer spending. According to the survey report called Global Consumer Trends: Staying Ahead of the Downturn, 67% of the respondents claim have that they have taken action to reduce spending in 2022. Across all 11 countries in the study, 26% expect their financial situation will be worse at the end of 2022 than it was when the study ran (August 2022). This was especially high in the UK, Germany and Spain.

More than one in four consumers globally have been buying more second-hand items because of rising prices. This is especially the case for Gen Z and Millennials. Usage and spend on platforms such as Vinted and refurbished electronics is likely to be higher and to make a considerable dent in the first-hand sales of several sectors, but especially fashion and electronics.

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Sources: https://www.radial.com/insights/ecommerce-survey-about-planning-peak-season-2022; https://www.dynata.com/resources/dynata-global-trends-report/; https://www.nzpostbusinessiq.co.nz/latest-ecommerce-insights/start-new-era