Cue the holiday music, place Santa on his garland-adorned perch and commence expanded holiday hours. People are ready to shop in stores. JLL’s recent Retail Holiday Survey sent to 1,080 U.S. consumers revealed that 63% of respondents plan to walk the store floor to do at least a portion of their shopping this year, a significant increase of more than 5% over last year’s tally.
In-store purchasing has surpassed online sales as the number-one option for the first time since 2020, even with pure-play online retailer Amazon decisively gaining the top spot of preferred holiday shopping retailers, as noted by 65.6% of survey respondents. Walmart and Target placed second and third, at 47.9% and 39.7%, respectively.
When it came to retail categories that consumers plan to visit, more than 60% of shoppers indicated they plan to visit at least one mass merchandiser, and nearly half of shoppers plan to shop at a department store. Mom-and-pop stores should feel encouraged, since 35% of respondents will visit the local shops and boutiques in their area.
Shoppers crave experience and human connection
Why the change? Consumers are feeling more comfortable about being out and shopping again. They want the holiday shopping experiences, to see and touch products before buying them and avoid shipping or supply chain delays. After prolonged lockdowns, mask mandates, social distancing and other pandemic-related restrictions, they want to have a shared and unencumbered experience with friends and loved ones. They want to see the festive decorations and absorb the seasonal aromas.
Savvy spending reigns during inflation
Retail sales have stayed afloat in 2022 despite an 8.1% increase in the consumer price index over last year. But what role is inflation playing in consumer holiday spending? Not surprisingly, inflation is having a different effect on holiday budgeting depending on household income. According to survey results, overall holiday budgets will remain virtually the same as last year. But 57.2% of modest earners with incomes less than $50,000 plan to spend significantly less. This group cited a total budget of $600—30.9% lower than the average holiday budget and 17.1% less than they spent in 2021. An important thing to note is that they plan to cut back on spending more than twice as much as prices have risen.
Extremely high earners (those earning more than $150,000) are motivated by ambience, expert sales advice and ultra-luxury brands. In fact, Lululemon’s second quarter earnings soared 25% and the holding company for brands Michael Kors, Versace and Jimmy Choo saw revenue climb 8.5% year-over-year. It’s clear that the difference in inflationary impact for high and low earners affects how consumers will shop for the holidays. Extremely high earners plan to spend $1,878, more than twice the average and 9.7% more than they spent last year.
To counter rising prices, consumers plan to use a variety of cost-saving methods. Nearly 30% will buy less expensive gifts, while 23.1% will buy for fewer people. Only 13.7% plan to forgo buying something for themselves because of inflation, while 10.2% will resort to the frowned upon (yet—let’s face it, very common) “regifting” practice. Slightly more than half of holiday shoppers will look for sales throughout the season, while roughly one-third will take advantage of deal days like Cyber Monday and Black Friday to fight inflation. In fact, 40% of respondents say they will venture out to a physical store on Black Friday.
The role of the discount retailer—particularly those with a grocery component—is proving to be substantial in this inflationary period as shoppers seek relief from high food prices. In fact, Walmart in November released a report saying its in-store sales are up 8.2%. Costco and Grocery Outlet have both shown growth in comp sales. The bottom line? Retailers that offer good value, discounts and manage inventory well will come out on top.
Consumers want more stores and restaurants
When the last present has been exchanged and all the returns are complete, pundits will begin weighing in on the success or failure of the holiday season and begin looking to 2023. While it was impossible to predict the trajectory of retail at the height of the pandemic—a frenetic time with no prior blueprint—it’s encouraging to see robust demand for retailers and restaurant chains to open new physical stores, even with inflation and the possibility of a recession. There has been little new retail construction nationally, and with increased demand, retail lease rates are on the rise. Thankfully, retail’s wild ride over the last three years is now giving us all hope instead of whiplash.