The Christmas period is often accompanied by lavish spending; there’s a gift for each meaningful one in your life, including you. So, inevitably, there’s a change in spending patterns that unfortunately can’t cope with the inflation dictating this holiday shopping season. People have started to balance their finances and cut back on all areas of spending, including Christmas presents. Some have turned to unique experiential gifts to the detriment of tangible goods, while others prefer to celebrate more intimately, spending less on the festive menu, socialising, and food. We can assume thus that conscious consumerism is all the rage today, and for a good reason – inflation has reached a level last seen 40 years ago. The Russia-Ukraine war and the still-felt aftermaths of the Covid-19 pandemic are some of the most pertinent global problems at the time being, driving up the price of food, gas, energy, and other critical things considerably in the UK and the majority of European countries.
Surging prices are a major global issue, posing problems for millions of individuals struggling to make a living. Retailers also experience very unusual times. So, it’s not enough to opine about the subject – a more in-depth insight is needed to understand the phenomenon.
Inflation has visibly impacted holiday season spending
June’s cost-of-living crisis may have concerned consumers but not necessarily affected them. Many expected some price rises, but they couldn’t see the repercussions on their money at that time. But a meteoric increase in prices has come since then, so the last month of 2022 finds a significant number of customers anxious about the scenario. Plus, there have been some changes as regards the UK’s mini-budget, characterised by a reversal in the tax measures. All this has left people doubtful about their economic future, not to mention the September sterling slump, referred to as a full-scale fiscal event.
Optimism in early 2022 has clearly gone. According to the EY Future Consumer Index, almost 7 in 10 consumers (67 per cent) are seriously anxious about the skyrocketing cost of living, and no less than 43 per cent aim to spend less this holiday season. That being said, people are being more cautious this December. They’ve moved to private label alternatives, and apart from value, they seek difference. Authentic products are a great pursuit this Christmas, as well as ‘treating’ at home instead of visiting restaurants or other venues.
What do reductions in spending mean for holiday entertainment and gift-giving?
The above-mentioned survey conducted by EY also specifies that 34 per cent of consumers are ready to cut back on presents for families. Online shopping is the most prevalent, but in-store hunting isn’t unexpectedly adopted. As for the organisation of festivities, shoppers plan to be more intimate and organise smaller events, preferably at home. In the face of surging inflation, everyone seems to be affected, but being cautious when shopping doesn’t necessarily mean indifference as regards the quality of products bought. People have directed their attention less toward indulgence and more toward practicality and convenience. Thoughtful gifting is thus an emerging trend that’s likely to stay. Gift-givers focus on relevant presents, meaning everything from hats, scarves, and household items to cannabis seeds, scented candles, and at-home spa essentials will likely be under the Christmas tree this year.
Are consumers becoming more “creative”?
Consumer behaviour has experienced some changes, but the direction it’s heading to isn’t so clear. The surging prices and the still-felt consequences of the pandemic have prompted people to turn to new experiences. This translates into working more remotely and spending more time at home. Although normalcy – if we could say so – is back, there’s still a sort of uncertainty concerning the virus. In some cases, social interaction isn’t too prevalent, so people feel forced to create it. Inflation stress is, of course, not missing, but this doesn’t mean it can’t be managed. Whether you cut back on some unnecessary items from your holiday shopping list or relax in the evening drinking a glass of cannamilk made from cannabis from Seedsman, there are options, and the choice is yours.
As people count every penny, will travel be affected?
Consumers have indeed cut back on many things, including dining at restaurants and present giving, but they surprisingly – or not? – value experiences outside of the house. So, instead of spending more on streaming services, for example, people prefer to explore places. Nonetheless, domestic travel has become a go-to solution for many consumers looking to spend the holiday outside the home. International travel is by no means disappearing, but since it’s more expensive than a trip to the country, it’s expected to decrease a bit in amplitude.
The comeback of a cheapness-first mindset
The affordability-first mindset, common at the start of the pandemic, seems to get back, finding many people hunting deals. People are more price-sensitive during this shopping season, looking for thoughtful yet reasonable gifts. But, interestingly, even in such circumstances, sustainability is one of the main priorities. The mentality around sustainability dictates many consumers’ behaviour regarding shopping. Hence, an impressive percentage of 68 per cent would rather repair than replace. Moreover, 59 per cent of consumers do not even pay attention to brands, considering a move to private labels.
How are retailers addressing the crisis?
Brexit has already affected the way in which many retailers transport and sell their products around the world. Now that inflation is surging, their concerns are raised. Supply and demand are considerably impacted, so retailers have to cope with the circumstances by adapting to the needs of today’s price-sensitive consumers. That means they must supply their product ranges at reasonable prices and offer real discounts.
Usually, smaller independent retailers are less touched by the economic uncertainty and pressure larger retailers have come to face lately.
The price changes undoubtedly impact everything from gift-giving to travel, but people will surely find solutions, as they always did.