Consumers ready to celebrate holidays but remain economy-conscious, reveals IBM study

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IBM’s Institute for Business Value (IBV) released an annual global holiday shopping and travel report, which reveals that global consumers are ready to celebrate the holidays again. However, new risks and uncertainty loom over their plans as a more comprehensive set of economic and political issues took center stage this past year.  

The study found that 2022 shopping budgets are up 8% over 2021—in line with Bain’s economic forecast—and holiday travel budgets are up by almost half. However, inflation and price increases have made financial concerns top of mind this holiday season. While 59% of consumers surveyed say they will be less concerned about COVID-19, two in three say they will be more concerned about the economy. In addition, 59% of respondents report worrying more about supply chain disruptions that could make holiday shopping harder or more expensive. 

“They’re starting their shopping and travel planning earlier but also want to hedge their bets with options like free returns or cancellations. To adapt to these changes in consumer behavior, retailers will need better visibility and traceability across product inventory, fulfillment, and returns. AI can help them understand, prioritize, and resolve critical issues in real time,” said Karl Haller, Partner, Consumer Center of Competency Leader, IBM Consulting. 

Other noteworthy findings by IBM include the following:  

Uncertainty around inflation, gas prices, and supply chain drives consumer plans

As COVID-19 pandemic concerns abate for many consumers, worries are shifting towards uncertain economic and supply chain conditions this holiday season. 

  • Nearly half of consumers surveyed will spend less if inflation continues to drive price increases. If they’re forced to cut their holiday shopping budget, over 60% will cut the non-essential categories like apparel, footwear, jewelry, and accessories.  
  • If goods are unavailable due to supply chain issues, 41% of respondents say they will spend less – but 30% will spend more if they find substitutions easily.  
  • If gas prices go down, 35% of consumers surveyed will do more in-store shopping. 

Consumers are making travel and shopping plans earlier but they want to keep their options open

Continuing the shift from the traditional Black Friday start of the shopping season, 58% of consumers surveyed plan to start holiday shopping before November, compared to 44% last year.

Almost two in three plan to pre-order this holiday season to get their products on time with guaranteed prices.  

At the same time, consumers want to keep their options open. Nearly seven in ten respondents will opt for brands or retailers offering free cancellations, order changes, and returns, as well as a COVID-19-safe environment this holiday season. The study findings indicate these perks are often worth the price due to the continued worries around the supply chain and product availability this season.  

Travel is also an area where consumers look to get back to normal while mitigating any risk associated with potential price changes due to inflation and fluctuating gas prices. The study found that average travel demand will go up by 9% during the holiday season, and 78% of consumers surveyed plan to purchase their airfare before October (61%) or October (17%). 

Sustainability remains top-of-mind for majority of respondents despite economic hardships

Consistent with last year’s report, sustainability remains top-of-mind for consumers surveyed globally.

73% of respondents said they consider sustainability when shopping for the holidays. Twenty-nine percent of consumers surveyed will bundle multiple orders to help reduce carbon emissions.

At the same time, 38% will avoid single-use plastics. In addition, two in five will shop nearby (42%) and buy products that are branded as environmentally sustainable or socially responsible (41%). Notably, respondents surveyed are willing to pay an average premium of 41% for sustainable products, 34% for sustainable air travel, and 37% for sustainable lodging this holiday season. 

Read this complete study by visiting https://www.ibm.com/thought-leadership/institute-business-value/report/2022-holiday-shopping-travel,