General consumer sentiment about US economy one of uncertainty: Survey

That means there are no guaranteed wins for retailers as consumers decide how much to spend through the remainder of the holiday shopping season, which can represent up to 40 per cent of sales for discretionary retailers, the company said in a release following a survey.

This year’s holiday shopping season started earlier and will last longer than it did in 2022. As early as September, retailers started promoting holiday ads on social media, with many more following in October.

Whatever their holiday shopping strategy, retailers are finding ways to connect with their customers. Some businesses emphasise membership and loyalty programmes.

Price match guarantees and widened return windows—of up to four months in some cases—are other strategies retailers are implementing.

Retailers should also invest in an improved supply chain and omni-channel experience to provide greater convenience to shoppers, McKinsey suggested.

While most consumers started their holiday shopping in October or earlier, 40 per cent of consumers this year say they intend to start holiday shopping in November, compared with 35 per cent in 2022.

Additionally, of the consumers who started their holiday shopping in mid-October, only about a quarter of them completed more than half of their holiday shopping, leaving plenty of room for retailers to reach these shoppers through the end of the year. November and December, therefore, are still critical holiday shopping months, the survey found.

US consumers say they are shopping earlier and that their holiday shopping will last longer this year, in both cases citing price as their primary motivation for doing so.

Shoppers who started browsing for products earlier did so in anticipation of price increases; other shoppers, expecting sales to come closer to the holidays, may have delayed their purchases. In addition to concerns about availability and lead times, consumers say they want to make their purchases over a couple of months rather than all at once.

Seventy-nine per cent of consumers said they were changing their shopping behaviours to trade down (swap their purchases for cheaper alternatives or forgo purchases altogether)—an increase of five percentage points compared with July 2022.

Most consumers rank better prices and promotions as their top consideration for holiday shopping this year (66 per cent), higher than how they ranked this consideration last year (59 per cent), and significantly above their next highest considerations, which are product availability and convenience.

Most Americans don’t intend to splurge on gifts this year: the percentage of consumers who intend to splurge on either themselves or others this holiday season declined by four percentage points year on year, from 39 per cent in 2022 to 35 per cent in 2023. This decline is mostly fueled by Gen Z belt-tightening.

Just over a quarter of consumers indicate that they plan to shop online more this season compared with last year, while fewer consumers plan to shop in-store.

Despite the ongoing shift toward online shopping, the physical-store experience still matters: 85 per cent of consumers expect to purchase at least one item in-store, while 12 per cent plan to pick up purchases in-store.

ALCHEMPro News Desk (DS)