74% of shoppers are tightening their purse strings this holiday season: How can CPG brands adapt?
As inflation and a pending recession continue to loom over Americans’ lives, holiday shoppers are more price-sensitive than ever before. With recent data from Shopkick (a Trax company) revealing that consumers are changing their shopping behaviors this holiday season, CPG brands need to start executing holiday strategies now, or risk massive impacts to their bottom lines in the coming months. Read on for the top trends that our research uncovered about consumer behaviors/preferences around holiday shopping, how these trends overwhelmingly impact CPGs, and how business leaders can adapt.
Based on the current economic climate, it should come as no surprise that many people are feeling a pinch this year, and our research supports this. According to Shopkick, a majority of consumers (63 percent) say inflation and the looming recession have impacted the way they plan to shop for the coming holidays, and even more (74 percent) are tightening their budgets as a result. Additionally, in order to combat this impact and save money on gifts and other holiday goods, 49 percent plan to shop for deals and sales, and 37 percent plan to limit the number of people they buy gifts for.
To respond successfully to consumers tightening their holiday budgets, CPGs will need to get creative with merchandising to set themselves apart from other brands they’re competing with. Trax offers a potential solution — Dynamic Merchandising (DMX). Our proprietary algorithm allows CPGs to see how their products are performing in real time. This means brands can effectively and efficiently restock merchandise or get up-to-the-minute inventory counts during the busiest shopping time of the year, which can (in turn) alleviate cost concerns.
Consumer shopping preference
Despite the negative impacts of rising costs, consumers are returning to shopping in stores after much time away during the pandemic. Last year, 57 percent of consumers said they planned to make the majority of their holiday purchases online. In contrast, and while nearly all shoppers note they will primarily shop online, the majority (71 percent) plan to split their holiday shopping time between online and in-store.
This is a beneficial shift for CPGs, and a prime opportunity to enable impulse purchases and meet consumers where they are while they are coming back to stores for holiday shopping. In order to drive purchases at high-traffic, secondary displays such as checkout lanes, CPGs can utilize a flexible workforce like Flexforce to maintain stock based on real-time data and AI. This allows brands to mitigate potential staffing challenges by responding to the real needs of an ever-shifting shopping climate, rather than projections based on historic data.
The downfall of deal days
According to our data, only 43 percent of consumers say they are planning to shop on Black Friday this year — an 18 percent decrease from last year. Similarly, 27 percent plan to shop on Cyber Monday this year, which is a staggering 40 percent decrease from last year. While shoppers might be coming back in-store for regular shopping, their interest in deal days appears to be dwindling.
However, it’s important to also note a recent trend — retailers increasing the number of deal days they offer. Amazon announced its Prime Early Access Sale at the end of September, Target kicked off its Black Friday sales event in early October and Walmart announced the details of its Black Friday Deals for Days event starting in November.
The impact of this uptick has yet to be fully realized, but CPGs should still consider various types of promotional strategies to keep up with the growing competition this holiday season (and earlier).
Brands looking to engage and retain customers who are returning to in-person shopping could consider a shopper engagement tool such as Shopkick. Shopkick provides high consumer engagement along the entire path to purchase and its unique pay for performance model has been proven to deliver high ROI, while driving incremental traffic, product engagement, and sales.
Regardless of the methodology they use, it will be vital for brands to communicate strategically and clearly about all their promotional offers in order to anticipate and successfully meet the needs of consumers who are increasingly feeling budget-conscious this holiday season. But by observing current trends and adapting accordingly, CPGs can approach the coming months with confidence.
Reach out to us at firstname.lastname@example.org for more information on solutions for CPG brands.