Despite tightening budgets, Blackhawk’s 2022 Holiday Forecast1 found that consumers plan to increase holiday spending this year. Consumers intend to keep buying, but are shifting their shopping habits in careful, creative ways to get more out of their holiday dollar and navigate rising costs this year.
According to Blackhawk’s research, just about half of surveyed consumers’ winter holiday shopping will happen between October and Black Friday/Cyber Monday. Shoppers started even earlier this year to spread out holiday purchases, monitor for promotions, find the best prices by shopping across different channels (e.g., in-store, online, in-app), and are increasingly turning to gift cards as go-to gifts that help stave off inflation and stick to a budget.
For retailers, that means it will be vital to have a solid cross-channel strategy to be able to meet consumer demands early and ensure plans span the entire length of the holiday shopping season. To better understand the retail landscape as we head into the critical 2022 holiday season, here’s a deeper look at the trends.
Consumers plan to keep spending, especially Gen Z
Generationally targeted marketing can help capture Gen Z spend, which will be key for retailers this year as the cohort will look to drive most spending increases. Surveyed shoppers overall are planning to spend more this holiday season with an 8% overall increase in gift spending this year1, but this increase is largely driven by Gen Z. Significantly more than any other generation, Gen Z respondents plan to increase year-over-year gift spend by 28%.
Gift cards are the go-to gift
Gift card sales are expected to see an even greater lift, as surveyed consumers anticipate spending nearly half of their holiday budget on gift cards1. Overall, shoppers surveyed expect to spend 18% more on gift cards this year compared to last year. Gen Z respondents are also driving this lift, with plans to increase gift card purchases by 57%.
Gift cards are a popular and economically resilient option because they give gift-givers the flexibility to load whatever funds fit their budget and are consistently the most requested gift year after year, according to the National Retail Federation. As retailers continue battling labor shortages with some even facing reduced store hours due to staffing, having gift card offerings front-and-center can help meet consumer demands and even prove to be a quick solve for shoppers that may have otherwise left empty-handed.
Digital channels are thriving
One of the biggest changes in consumer behavior brought in recent years is also likely to be the most permanent: everything about daily life has become a hybrid of online and in-person experiences. This includes shopping, delivery and payments. When it comes to sending holiday gifts this year, some 37% of shoppers2 surveyed intend to send digital gift cards directly. Shoppers love the ease of being able to send near-instant gifts and being able to buy gifts at the last second. They will also be looking to shop across channels more than ever this year, likely as a tactic to find the best prices. Increasing digital gifting options and callouts to shoppers will help retailers not only meet consumers’ needs throughout the entire holiday season, but also capture their share of last-minute holiday shoppers.
Gift cards give gift-givers the flexibility to load whatever funds fit their budget and are consistently the most requested gift year after year.
Deals will deck the halls this year
Fifty-eight percent of Americans surveyed1 report that they plan to change their shopping behavior this year and are especially interested in using discounts and promotions to offset rising costs. More than 40% of shoppers surveyed report using promotions and discounts more often for all purchases, but retailers are better off steering clear of discounts and focusing their offerings on reward-based promotions. Discounts are short-term, one-and-done solutions that may temporarily help turn over inventory, but don’t boost sales beyond the initial purchase. Reward-based promotions can outperform instant discounts by driving significantly more revenue and a greater return on marketing investment through ongoing customer relationships and engagement. Consumers benefit as well—regular, long-term brand touchpoints can help ensure they receive more targeted marketing opportunities, deals, rewards, and more for future purchases.
As consumers continue to adapt and navigate economic headwinds, these trends will be critical for retailers to continue to track and react to in order to keep up with consumer demands and expectations, both for holiday and into the future.
Inflation isn’t stifling holiday shopping, but it’s changing how, where, and when people are shopping
By Brett Narlinger, Head of Global Commerce, Blackhawk Network
Brett Narlinger is head of global commerce at Blackhawk Network, a global branded payments provider. He leads and drives growth across the organization’s physical and digital retail business globally.