A Jolly Christmas or “Bah Humbug”?

Elliana James

Starting around the middle of 2022, I noticed an uptick in articles considering whether the Christmas 2022 retail season would bounce back to pre-COVID levels or above. Second, to COVID concerns was the absolute explosion in adoption of online purchasing and deep global concerns about inflation. Chain Store Age, a professional magazine (print and online) whose audience is corporate decision-makers in the retail space, started off the conversation back in March, 2022, with an analysis of how shopping trends have changed. A survey of 20,000 consumers hosted by the shopping rewards app Shopkick in February 2022 revealed major shifts for in-store and online shopping behavior. 81% of consumers surveyed will wait to purchase until there is a sale or a coupon. 79% will purchase a second brand choice if their favorite brand is sold out. 

The traditional shopping frenzy of late October through New Years saw supply chain worries last year. This year, those persist, but there is also the added concern for consumers about widespread inflation. Additionally, supply chain issues haven’t been totally resolved. 77% of shoppers expect at least some items to be “out of stock”. Consumers report starting earlier than ever to shop for their “must have” gifts this year. Multiple surveys, including a deep study by Deloitte, validate the idea that consumers are changing their strategies to get the gifts they want. One-quarter of their purchases will be finished in October. Studies dating from 2010 have found that people derive more happiness from gifts that amount to experience more than gifts which are material. Also in the Deloitte study it showed that millennials value the perceived uniqueness and personalization of experience gifts. The Deloitte study revealed that the number of gifts consumers plan to buy was 9 gifts, in contrast to 16 gifts in 2021. 

Despite consumer preoccupation with inflation, Deloitte still found they are planning on spending an average of $1455 this year, which is similar to last year’s expenditure. There were some changes in consumer strategies for saving money. Sales, coupons, and buying slightly used items , are some of the common strategies consumers have used to compete with generally rising prices. 

An early December 2022 online article in the English version of the Chinese website Xinhuanet covered man-in-the-street interviews in New York City. The interviews showed some consumer spending trends that are cause for concern. For Example, the two-month period between Thanksgiving and Christmas is typically 20% of the retail industry’s annual sales. One after the other, the interviewees reported that the general inflation of rent, food, gas, and other household costs prevented them from making larger purchases this year. Interestingly enough, the article cites a survey by Michigan State University which stated that consumers were planning on spending $700 for their holiday expenses, a big dip from the past three seasons at $880. The significant gap between the spend per person surveyed by Deloitte ($1455) and Michigan State University ($700) could be due to how the survey subjects were chosen or what questions they were asked. Since there were no publicly available copies of the surveys, it is all speculation. 

TriplePundit published a report on purchasing trends for gifting previously owned items. Its report estimated that over $69 billion will be spent on such items. This is also in keeping with a strong uptick in socially responsible consumerism and sustainability (7 out of 10 shoppers report a bias towards purchasing sustainable products). Completely onboard - and sometimes leading this trend - are companies like Patagonia, which has a separate used-clothing option and actively solicits “trade-ins” of their clothes. They boast that “keeping our stuff in use for just nine extra months reduces the combined carbon, water, and waste footprint by 20 – 30%” Save money. Save the planet. What’s not to love about this approach? 

In Europe the surveys and the concerns are very similar. Inflation, short stocks of items, cautious outlooks on the future of the economies make this a worldwide story. Reuters focuses on the UK and business concerns of lackluster sales leading into Christmas. Barclaycard reports that almost half of the people surveyed at the end of October planned to spend less this year. Almost 60% said their gifts would be less generous, and a surprising 42% even said they were cutting back on socializing. 

A broad CNBC article touched on several European countries as they exited the Black Friday end-of-November shopping surge. In Germany, only 30% of the HDE retailers surveyed said they were satisfied with the purchases. Just over half of the retailers said they were dissatisfied, clearly fearing that shoppers had already completed their purchasing for the holiday season.Holland reported transactions up 12%, but most of those were smaller items at department stores (shoes, clothing, food items). Electronics and furniture were left in the stores. Italian consumer spending got mixed reviews. “Federazione Moda Italia Confcommercio, a trade body for Italian fashion retailers, told Reuters that sales across the sector were down by 10 – 15% compared to last year.” In Milan, also an Italian city that is a megacenter for fashion, the reports were in the opposite direction: “up more than 10%”. 

The last topic to consider when evaluating holiday spending trends is analyzing purchasing trends for gift cards. A majority of Americans have unused gift cards. That amounts to $21 billion, spent by someone and offered as a present. A present that hasn’t been used. USA Today shared that, on average, a person has $175 in unspent gift cards, vouchers, and store credit. Don’t think that younger people would appreciate a gift card. Half of millennials and Gen Zers have not spent their gifts. The more income you have, the more likely you will have larger balances on your unused (as of now) gift cards. 

The reality of gift cards is: if that is your gift to someone, it may be perceived as impersonal. You might hold onto the gift card for too long, waiting for the right moment to spend it (29% of those surveyed). You might forget where you put it (25% of those surveyed!) If you have some gift cards and can locate them, this season would be a good time to spend them! 

By the end of January, we should see updated statistics across the globe to confirm what appears to be the consumer case now. People will buy fewer gifts for fewer family and friends. They will spend at about the same levels as in recent years, but considering inflation, they are buying fewer goods. They will also be buying, both for themselves and others, repurposed items shamelessly and maybe even proudly. Consumerism isn’t dead, but it is taking a more purposeful nap. Perhaps, as global inflation abates, as predicted by the International Monetary Fund to settle at 4.1% in 2024 consumers will feel more empowered to impulse buy and to stock up on items they have wanted for a while. For now, most of the world is being cautious.