Inflation trends this holiday season
It’s October. The weather is still in the double digits. Thanksgiving just happened. Halloween is around the corner. So naturally, all marketers are thinking the same thing: Holiday predictions!
It’s not that we, the Insights Council, want to beat everyone to the punch, or that we’re particularly eager. Sidebar: 62.5 per cent of Insights Council members are currently dealing with shoulder injuries from keeping their hands up perpetually during class.* It’s just that it is our job to think ahead, like way ahead into the future. So, with the cost-of-living crisis on everyone’s mind – and all over the media – we’re looking at a few trends for marketers to keep in mind as they plan for the holiday season.
The cash crunch
From our members in the banking sector, increases in interest rates are having an impact: Deposits are down. More dollars are going to paying debt, which people have more of because credit ratings were more favourable during the pandemic. Does that mean less holiday spending in favour of debt payment? Perhaps. It will vary depending on the segment. Entrepreneurs aren’t saving more because their money isn’t as accessible, and employees have fewer options.
For marketers, that means keeping a close eye on understanding consumer attitudes around spending, such as price sensitivity and overall outlook on money; whether they prefer to live for the moment or be more prudent savers.
The holiday season is notorious for shoplifting and theft. But this year, it’s different. There is pride in disobedience. How-to videos of retail shoplifting are rising online. #Theft was trending upwards on TikTok starting last year, and #Shoplifter has spiked in 2023. While the content also includes vigilantes and fails, the trend is worrying. What is different is the sentiment of “sticking it to the man.”
For marketers, it means thinking through how to justify pricing in order to regain consumer trust, and combat an increasing rate of theft.
Basket sizes are resilient
From our friends in the loyalty sector: Basket spend is flat, but with fewer items due to price increases. When it comes to grocery, centre store purchases and private/store labels are on the rise as well as store shifting to lower end banners, which impacts basket composition.
For marketers, that means continuing to use data to see what consumers are buying and how product selection is changing.
In direct opposition to the above, luxury items are seeing a spike in some sectors. For example, luxury grocery items are favoured opposed to restaurant visits. This is the well-known lipstick effect.
For marketers, that means the opportunities for pricier products aren’t completely gone. People want to treat themselves, if it makes sense. Find a way to help them with that. This also highlights that the competitive set has expanded beyond other grocers to restaurants and food delivery services as well, which is an opportunity.
Think through how you can leverage brand equity and consider ways to approach capturing value seeker segments.
Travel will be resilient as more global travellers look to North America again
Travel is a large discretionary income item and one of the easiest ones to cut, but we see the demand continue into the ski season across North America, with most hotels fully booked during peak periods. Though, this trend might be lingering demand from COVID – we can’t be sure yet.
For travel marketers, this means an opportunity to promote travellers to visit a second location, do more and stay longer. Longer stays are better for the environment and reduce the nightly cost of a visit, so it’s a win-win for travellers.
The big conclusion
Unfortunately, a combination of COVID and the rapidly changing economic climate has made it impossible to rely on past data for any insights. Marketers need a continued investment in research, data and insights to keep a finger on the pulse of the market, consumer sentiment and make informed decisions.
Take time to see how consumer spending behaviour is shifting. Having access to this information and being able to analyze current data to understand what customers are doing and thinking is critical. Give careful thought to whether you are getting the insights you need to determine the best path forward.
We hope that you continue to invest in insights. And with that, we wish you a happy holiday season. Too soon?
*n=0 because we didn’t actually do this survey and also have zero confidence in this stat.
Vito De Filippis