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Top 5 Holiday season predictions for 2022 (and beyond)

A person wearing a Santa hat standing next to numbers one through five in gold circles.

Holiday e-commerce and retail is a tricky area for brands to navigate. It’s the time of year when demand – and expectations – for a seamless customer experience skyrocket. Meeting these expectations entails a lot of risks, but also a lot of rewards for the businesses who get it right.

If you want to boost your ecommerce holiday sales this year, you’ll need to pay close attention to consumer sentiment and all the ways that shoppers are trying to do more with less. Luckily for you, we’ve put together this round-up of top holiday shopping predictions for 2022, so you know exactly where to dedicate your efforts.

Let’s begin!

1. Consumers are starting holiday shopping early due to inflation concerns

The current inflation rate is the big economic story of the moment, and retailers should be paying close attention to how this is going to impact shopping behavior and holiday retail sales this peak season.

According to 4Over’s recent survey, 73% of consumers are expecting price hikes ahead of the holiday season. Despite this, 41% still expect to spend more this holiday season than they did last year, which puts shoppers in a tricky position

The most popular strategy, to cut costs. To start buying gifts earlier and avoid the brunt of higher prices. While 31% of survey respondents say they plan to start their holiday shopping in early November, 23% are planning to buy gifts as soon as they see something suitable.

In sum, an early start means that your brand needs to be ready to cater to your customers’ holiday gift-buying needs ASAP. If your seasonal inventory hasn’t arrived yet, subtly changing up your messaging on your website and social media channels can be enough to get your followers thinking about the 2022 holiday shopping season close at hand.

2. Consumers are gunning for discounts

In addition to starting holiday shopping early, consumers are set to be far more price-conscious than the prior year. While 2020 and 2021 saw covid infections raging to the highest levels, low interest rates and healthy savings saw many shoppers spending big during the holiday season. But thanks to inflation and continuing supply chain issues, the 2022 holiday shopping season will see many shoppers pulling back from spending and prioritizing low prices.

Not surprisingly, online sales are going to bear the brunt of this more cautious behavior. 4Over’s survey also found that 56% of consumers plan to buy gifts during Labor Day, Black Friday, and other online shopping events. Moreover, a study by Digital River found that 35% are actively looking for discount codes and 29% are using shopping comparison sites more often, showing a higher willingness to switch brands, and lower levels of customer loyalty.

But there’s a silver lining; 64% of online shoppers say they want more help from retailers to manage price increases. In sum, this means the brands with the best discounts and promotions will see the most solid performance this holiday shopping season.

3. Loyalty initiatives will be key to avoid shrinking profit margins

While some retailers can increase revenue by driving high volumes of low-value ecommerce sales, small independent sellers cannot follow this strategy without risking a serious erosion in their profit margins. That’s why reward programs will be an essential ingredient to profitability during a holiday season where consumer loyalty is tough to come by.

Ultimately, it’s a losing battle for brands to win customers on low prices alone, especially during cyber week; it might secure you that initial conversion, but there’s always going to be another ecommerce business ready and willing to undercut you. To avoid packing a bunch of one-off transactions into your total holiday retail sales, you’ll need to think carefully about how you can retain customers beyond the holiday shopping season.

It’s no coincidence that brands large and small are in the process of tinkering with their loyalty programs. With peak season approaching fast, loyalty programs allow you to offer existing customers additional incentives to stay loyal to your business.

But great loyalty shopping experiences don’t include earn-and-burn style points systems. Think exclusive access to holiday ecommerce sales or new products, free shipping, escalating discounts based on loyalty status, and even digital twins of iconic items, as is soon to be pioneered by Starbucks.

The better value your perks are, the more likely it is your members will want to continue their relationship with your brand as they search for holiday gifts. Due to the time it takes for customers to realize the benefits of tiered loyalty programs, it may be worth considering a premium loyalty option, where shoppers pay upfront for access to perks.

4. BNPL will be in high demand amongst holiday shoppers

The busy nature of the holiday season can make it difficult for consumers to manage cash flow while also snapping up sought-after products before they sell out. Buy Now, Pay Later (BNPL) offers the perfect option by enabling shoppers worldwide to defer payments while still receiving their holiday purchases upfront.

The 2021 holiday season saw consumers utilize BNPL at double the rate seen the year before, while 45% of shoppers cited spreading out their holiday spending as their primary reason for using BNPL.

In the current inflationary environment, the value proposition of BNPL is more compelling than ever before. The recent Back to School spending spree saw some 40% of consumers relying on BNPL programs to afford goods such as textbooks and laptops. It’s safe to assume that the upcoming holiday shopping season will see a significant boost in the use of BNPL.

And it’s not just discount retailers who should consider offering Buy Now, Pay Later plans; Pymnts’ BNPL Tracker study discovered that 71% of BNPL users making over $100,000 increased their BNPL usage in the past twelve months. Far from being only for the low-income consumer, the zero fees, no-strings-attached nature of BNPL is also capturing more affluent shoppers. After all, why purchase items upfront if you don’t have to?

So, if your business doesn’t currently offer BNPL, now is the time to consider adding it as a payment option – or you could end up missing out on a large chunk of customers this holiday season.

5. Free shipping will be one of the most sought-after holiday promotions

Free shipping has long been a favorite peak season offering for consumers, and the 2022 holiday season is no exception. While pandemic-driven holiday shopping online is beginning to revert to more normal patterns, 81% of consumers surveyed by Ware2Go are reportedly planning to purchase at least some of their holiday gifts online this year, with 56% listing free shipping as their most sought-after perk. This means that for consumers pursuing digital-first shopping, the cost of shipping will determine whether they add to your holiday retail sales.

If you don’t normally offer free shipping, the holiday promotional calendar is the ideal time to get your customer’s attention. Thanksgiving weekend, also known as BFCM or the Cyber Five period, is when consumers are most likely to expect the best deals.

Free shipping during the holiday season also presents a nice alternative to straight-up holiday discounting, as it’s possible for your brand to control costs by using slower, more cost-effective shipping methods. But take note of peak season surcharges; they can seriously affect profit margins on ecommerce holiday sales!

While the world settles back to normal after the pandemic, key challenges provoked by COVID-19 remain, including supply chain problems, rising prices, and economic uncertainty. Our holiday shopping predictions reflect how consumers are becoming savvier and more resourceful in how they shop during peak season, relying on diverse payment options and discount hunting to buy holiday gifts and stay within budget. By aligning your holiday season selling strategies with this more cautious shopping behavior, your brand will be on track to boost overall ecommerce sales and offer a better customer experience.

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