Commentary

Holiday Downcast: Worldwide Spending Is Being Cut By Billions

This year’s holiday season is going to be a gloomy one for retailers across the globe.   

Shoppers plan to cut $55 billion from their non-food spending. And 58% are reducing their outlays, according to the Holiday Shopping Trends Report from Metapack, conducted by Retail Economics. 

Consumers cite these reasons for their unease:  

  • Rising inflation — 28.8%
  • Rising uncertainty about the economy — 18.3%
  • Lack of savings — 11.6%
  • Loss of earnings — 11.5%
  • Rising interest rates — 9.6% 
  • Lack of available credit — 8.6%

But what are retailers doing to offset their own rising operating costs? Their responses, which apparently come from other research, are not likely to please consumers:

  • Increasing cost of delivery — 34.7% 
  • Changes to delivery time frame — 26.2% 
  • Increasing promotions —18.1%
  • Eliminating free returns — 10.1% 
  • Restricting returns policy — 7.6% 
  • Increasing staff — 3.3%

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The study puts consumers into four categories: 

  • Distressed — 34% 
  • Secure but concerned — 30% 
  • Undeterred — 23.1%
  • Stretched spenders — 12.5% 

U.S. shoppers are not as troubled as the overall average: 

  • Distressed — 30%
  • Secure but concerned — 38% 
  • Undeterred — 21%
  • Stretched spenders — 12%

But a majority of U.S. consumers are cutting back due to the rising cost of living:

  • Plan cut back across ALL related spend — 30.1%
  • Yes, plan cut back across MOST related spend — 11.8%
  • Yes, plan cut back across SOME related spend — 16.3%
  • No, have no plans to cut back relates spend — 41.5% 

In contrast, 40.1% of UK shoppers plan to cut all related spending. 

The UK is facing a 22% reduction in holiday shopping spending, for a total of U.S. $5.2 billion. The U.S. will be taking a 14.4% hit totaling U.S. $30.6 billion. 

Germany will suffer only a 9.4% slide, for $3.4 billion. 

The following product areas will be seeing cutbacks: 

  • Apparel — 26% 
  • Electricals — 22.3%
  • Toys — 20.9%
  • Home-related — 19.8%
  • Health & Beauty — 17.4%
  • DIV & Gardening — 16.7% 

Less-affluent consumers are being especially hard-hit.  

What can brands offer consumers in their holiday emails and web promotions? Free returns are very important to 93% of shoppers, more than speed of delivery, the study states. 

Retail Economics surveyed 8,000 consumers across the UK, USA, Canada, Australia, Germany, France, Italy and Spain in August 2022.  

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