Consumers are willing to celebrate and consume during the festive season, but uncertainty sets in.

According to the “Annual Global Holiday Shopping and Travel Report” released by the IBM Institute for Business Value (IBV), many global consumers are ready to celebrate the festive season again and will be shopping earlier than in previous years. However, as a broader set of economic and political issues took center stage last year, new risks and uncertainties loom over their plans.

The study concluded that shopping budgets for 2022 increased by 8% compared to 2021 – in line with Bain's economic forecast – and holiday travel budgets increased by almost 50%. However, factors such as inflation and price increases have brought economic issues to the top of concerns this festive season. While 59% of consumers surveyed say they will be less apprehensive about Covid-19, two in three say they will be more concerned about the economy. 59% of respondents say they are more worried about supply chain disruptions that could make Christmas shopping more difficult or more expensive.

“ According to the results of the 2022 study, consumers expect to return to the traditions of this festive season, which they have had to alter in the last two years, ” says Karl Haller, Partner, Consumer Center of Competency Leader IBM Consulting. “ They are starting their shopping and travel planning earlier, but they also want to secure their choices with options such as free returns or cancellations. To adapt to these changes in consumer behavior, retailers need to improve the visibility and traceability of their inventory, deliveries, and product returns. Artificial intelligence can help them understand, prioritize, and resolve critical issues in real time .”

Uncertainty

Uncertainty surrounding inflation, gas prices, and the supply chain is impacting consumer plans. As pandemic concerns subside for many, attention has turned to economic conditions and the supply chain, both of which are so uncertain during this holiday season.

Almost half of the consumers surveyed will spend less if inflation continues to cause price increases. If forced to reduce their Christmas shopping budget, more than 60% will cut back on non-essential categories such as clothing, footwear, jewelry and accessories.

If goods are unavailable due to supply chain problems, 41% of respondents say they will spend less, but 30% will spend more if they can easily find replacements.

If gas prices go down, 35% of consumers surveyed will do more shopping in stores.

Shop earlier

Consumers are making travel and shopping plans earlier, but want to keep their options open. In line with the shift from the traditional start of the shopping season with Black Friday, 58% of consumers surveyed plan to begin their holiday shopping from the beginning of November, compared to 44% last year. Almost two in three plan to pre-order this holiday season to secure their products on time and at guaranteed prices.

At the same time, consumers want to keep their options open. Almost seven out of ten respondents will opt for brands or retailers that offer free cancellations, order changes and returns, as well as a safe environment in the face of Covid-19. The study results seem to indicate that these perks are often worth the price due to ongoing concerns about the supply chain and product availability during this festive season.

Travel is also an area where consumers are looking to return to normal, while mitigating any risks associated with potential price changes due to inflation and fluctuating gas prices. The study concluded that average travel demand will increase by 9% during the holiday season.

Sustainability

Sustainability remains the primary concern for most respondents, despite economic difficulties.

Consistent with last year's report, sustainability remains the top concern for consumers surveyed worldwide. " As more consumers align their purchases with their values, retailers and brands that can provide more environmentally friendly options could potentially capture a larger percentage of spending this holiday season ," adds Karl Haller.

Three-quarters (73%) of respondents said they are considering sustainability when shopping. 29% of consumers surveyed will group multiple orders to help reduce carbon emissions, while 38% will avoid single-use plastics and two in five will opt to shop locally (42%) and will buy products that are labeled as environmentally sustainable or socially responsible (41%). Notably, respondents are willing to pay an average premium of 41% for sustainable products, 34% for sustainable air travel and 37% for sustainable accommodation this festive season.

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