As retailers face consumer skepticism, stockouts should be front of mind as shoppers prepare to hit the stores for last-minute deals
Insights from Simon-Kucher’s Fifth Annual Holiday Shopping Trends Study
[Boston, MA, October 17, 2023] — In its fifth annual Holiday Shopping Trends Study, leading pricing and strategy consultancy Simon-Kucher has unveiled insights that will shape the retail strategies for the 2023 holiday season and beyond. As Black Friday participation remains robust, there are shifting consumer dynamics and headwinds that retailers must navigate to secure success.
Though inflation appears to be stabilizing, consumer fatigue will continue to be an unavoidable dynamic for retailers this holiday season. This, paired with fluctuating inventory levels and skepticism around false pricing and product availability, will be prevalent challenges.
Amidst this turbulence, our recent study sheds light on the upcoming holiday shopping season and consumer behaviors. The study offers valuable insights into the evolving retail landscape based on the perspectives of everyday US consumers, representative of diverse generations, incomes, and preferences. This will unveil key insights shaping the upcoming holiday season and provide agile strategies and tactics to enhance retail business’ Q4 earnings.
Five Key Takeaways from the Study:
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A Shift in Discount Expectations: Discount expectations are more normally distributed than in previous years - split into near equal thirds across discount buckets. With one-third of consumers expecting discounts in the anticipated range of 26–40 percent.
This points to a more differentiated discount strategy than years past, as well as the expectation that discounts scale as items prices scale. -
Consumer Skepticism is on the Rise: Consumers are increasingly raising questions about the level of transparency exhibited by retailers, particularly e-commerce giant Amazon, during major promotional holidays. This growing skepticism stems from a perceived lack of clarity regarding the actual savings available to shoppers.
In a resounding call for transparency, 40 percent of consumer respondents, from diverse age groups expressed their belief that “false pricing” practices are leveraged during promotional periods.
As consumers prioritize transparency in their shopping experiences; retailers face increasing pressure to address these concerns and demonstrate their commitment to delivering fair and honest deals during promotional periods. -
Stockout Concerns: The unreliability and inconsistency of product availability on physical store shelves pose a significant challenge for brick-and-mortar retailers. A lack of product availability can lead to reduced foot traffic in stores and potentially push consumers to explore online alternatives.
Our study respondents paint a picture of holiday shopping preferences for product categories, with 49 percent of consumers planning to shop exclusively in-store for certain holiday deals and 51 percent opting for online shopping. This highlights the importance of catering to diverse shopping preferences.
Furthermore, 63 percent of consumers are planning to conduct their holiday shopping within the two weeks leading up to Black Friday and Cyber Monday. This underscores the urgency for retailers to be prepared, maintain robust inventory levels, and offer attractive deals to capture the attention of last-minute shoppers. -
Inflation fatigue: The impact of inflation has been a catalyst for change in consumer behavior. Shoppers are becoming more discerning and selective in their purchases - 45 percent of consumers are choosing to shop less often, instead focusing on spending more on essential items. Additionally, shifting their spending to take advantage of promotions to fulfill their essential needs.
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Gen Z Purchase Power: As inflation fatigue continues, Gen Z is disproportionately affected, prompting a noteworthy adjustment in their spending patterns. Like other generations, Gen Z consumers respond to economic headwinds by prioritizing essentials. However, they will planning reserve promotional events for non-essential items and plan to spend more on beauty, fashion, pets, books/magazines, streaming services, and video games during big promotion days relative to other generations.
The upcoming holiday season presents a unique set of challenges and opportunities for retailers. By understanding these consumer trends and concerns, businesses can adapt and thrive in this dynamic environment.
“Consumers are not expecting a one-size-fits-all discount strategy this holiday season. Retailers can leverage promotions to differentiate discounts across product categories and strike a better balance between meeting consumers’ discount expectations and maintaining their profitability.” Shikha Jain, Partner, Simon-Kucher.
Contact us for a copy of the Holiday Shopping Study insights or schedule an interview.
About the Study:
The US Holiday Shopping Study survey was conducted in August 2023 by Simon-Kucher, fielding through panel data provided by Cint, an independent market research agency. The study surveyed ~900 consumers across the USA. The study included representative quotas for age, gender, living area, and income level. The study, which was designed to measure consumer attitudes towards promotional days, holiday shopping trends, inflation and spending behavior, and product preferences, focused on Consumer Goods & Retail.
For further information, please contact:
Niki Irby
niki.irby@simon-kucher.com
About Simon-Kucher
Simon-Kucher is a global consultancy with more than 2,000 employees in 30 countries. Our sole focus is on unlocking better growth that drives measurable revenue and profit for our clients. We achieve this by optimizing every lever of their commercial strategy – product, price, innovation, marketing, and sales – based on deep insights into what customers want and value. With 37 years of experience in monetization topics of all kinds, we are regarded as the world’s leading pricing and growth specialist.