Shoppers Find Ways to Spend Despite Cost-of-Living Crisis
(Dec 21, 2022) — By Jennifer Hutchins
Associate Professor of Marketing and Professional Sales
Checking the temperature of consumers during this holiday season, we learn that shoppers are out there shopping! However, soaring inflation and cost of living concerns have definitely dampened the spirits of some during this time when people are encouraged to give, give, give.
This year’s holiday shopping trend is toward value and convenience. Sales reported from “off price” retailers such as TJ Maxx and Dollar General reveal that these retailers are emerging as winners even among higher income shoppers, contributing to the projected 6-8 percent growth in US spending on personal consumption expenditures compared to last holiday season.
Speaking of low-price retailers, Walmart took an innovative approach to win consumers’ holiday spending this year. Their approach should have established home shopping television channels like QVC taking note! Specifically, on December 8th, Walmart tested out a livestream shopping experience following a year of increasing its streaming presence. The livestream event consisted of a half-hour special highlighting holiday tips and gift ideas, including, of course, items available at Walmart.
The value giant is taking a cue from other companies that have realized there are more ways to add value for consumers than offering more than ads and coupons. Offering consumers content that is helpful or informative – rather than going for the hard sell – is a strategy used throughout the marketing industry.
Adding to the value/convenience equation this year, we see continued offers by retailers for free shipping. Speculation ran rampant earlier this year around retail giants potentially reigning in their free shipping (and returns) offers due to inflation costs affecting their bottom lines. However, despite the value to consumers of free shipping, the two largest delivery giants predict lower-than-expected volume. Fed Ex and UPS both adjusted their annual forecasts earlier this year. While the details are confidential, contractors working with the shipping giants have reported a decrease of anywhere between 5 and 15 percent in shipping volume. This means that competition for shoppers/shippers has been fierce.
Interestingly, the United State Postal Service initiated an increase in holiday shipping prices. These surcharges are not new in the industry, but given the state of our economy, the USPS may see a significant reduction in volume as well.
While current economic conditions are driving consumers to lower-cost retailers, holiday shopping is still on target to increase year over year. I almost wonder if there is any economic crisis that US consumers can’t weather when it comes to showing their gift-giving love during the holiday season.
Jennifer Hutchins is an associate professor of marketing and professional sales in the Coles College of Business's Department of Marketing and Professional Sales. Her resaerch interests include advertising, promotion, entertainment marketing, consumer behavior, and sustainability services marketing.