Cautious Optimism Fuels Holiday Spending

Retailers can look forward to a happier holiday season. All the merriment is due to a 4% gain in gift-giving budgets, according to Accenture’s annual consumer survey. Despite the good cheer, shoppers will seek more deals than in years past.

“It is encouraging that consumers are planning to spend more this holiday season. But with this optimistic outlook comes a reminder that price and value remain front-of-mind for many,” explained Jill Standish, global lead for Accenture’s retail industry group. “Then there’s the challenge of where and how consumers experience a retailer. Everything from the adverts and digital marketing they receive, to the online and in-store experiences, to the customer service they encounter along the way. These are all factors that can make or break the season.” 

Accenture’s Annual Holiday Shopping Survey, of 1,500 US consumers, uncovered three trends that will shape the all-important holiday selling season. And while consumers may be in more of a gift-giving mood, with so many retailers and brands competing for attention and share of shopping dollars, there are three trends successful retailers should watch out for this season:  

Trend 1. Cautious optimism, as deal-seeking intensifies  

There are positive signs that holiday spending is on the rise. Consumers plan to spend $613 this season, on average, compared with $591 in 2023—an increase of 4%.  

Despite consumers planning to spend more, retailers will need to cater for a group of “deal seekers” who love a bargain and are driven by promotions, incentives and savings. Almost seven in 10 (68%) consumers rated price and value among the most important factors in deciding what retailer to buy from, and 30% said they will shop when they are offered promotions or discounts, according to Accenture.  

To make for even tougher sledding, this year, retailers face one less shopping weekend, presidential election ripple effects and consumer behaviors that can turn on a dime, putting their levels of agility and responsiveness to the test. 

What can retailers do?  Accenture advises offering deals through December to combat cautious consumers. In other words, win every day, not just peak sales and promotional days. Retailers should look beyond the stand-alone sales events such as Black Friday and Cyber Monday. They must put in place a dynamic sales and marketing plan anchored around existing inventory that can be adapted as demand fluctuates. With 38% of shoppers planning to shop between early November and early December, retailers will need to pay close attention to data and analytics to carefully balance how and when to offer promotions and discounts, while preserving their profit margins. 

Trend 2. Gift cards are an untapped revenue accelerator for retail

Last year, 2 in 3 consumers (65%) consumers received gift cards. This year, 40% of consumers plan to buy gift cards. Yet, half of the recipients surveyed said they failed to redeem the full balance of the card, resulting in an unspent balance of $120, on average, per consumer.

The global gift card market, which Statista estimated was worth $200 billion in the United States last year, is a staple part of the holiday gifting experience. But gift cards don’t always foster the personal connection that drives brand loyalty.  

About three-in-four (74%) of US consumers perceived buying a gift card as an easy and safe option. However, for those on the receiving side, a third (33%) were disappointed that the person hadn’t put time and effort into planning a personalized gift. Concerningly, 35% felt weary thinking about the time and effort they would need to put into using the gift card. 

While the purchase of a gift card immediately translates into revenue for the retailer, unredeemed cards represent a significant missed opportunity for retailers, who could gain new, lifelong customers and incremental sales.  

What can retailers do to reduce gift card regret?  Keep it simple and make it easy. For retailers to make the most of the gift card opportunity, they must make the cards easy to purchase, use and manage. Recipients of gift cards told Accenture that simplifying balance check options (36%), regular reminders of unspent balances (35%) and an easier redemption process online and in-store (32%) would help ensure they use their gift cards.  

“With holiday shopping underway, many customers will turn to gift cards as an easy way to save time and effort. However, they can be seen as lacking the personal touch by those on the receiving end,” warned Oliver Wright, global lead for Accenture’s Consumer Industries practice. “As a category, gift cards have tremendous potential to be reinvented. Building creativity and interactivity into the experience can help evolve gift cards from a last-minute, mind-blank gifting solution, into a thoughtful and personal gift that customers are excited to give, and recipients are excited to use. Done well, they could help retailers and brands attract new and lifelong customers.”  

A personalized and price-aligned strategy helps, too, according to Accenture. Retailers can increase customer satisfaction and generate loyalty through enhancing the gift card experience, making it less transactional and more personal. For example, suggesting beauty products for cold weather conditions that match the balance of the gift card, while providing personalized advice on how to incorporate into a daily regimen. Followed with tailored suggestions and incentives encouraging the gift card recipient to engage and return.  

 “Successful retailers will be those who harness the power of their brand as a magnet to draw customers to shop with them over their competitors,” Standish added. “It will require paying even closer attention to customer data, ensuring promotions, marketing campaigns and advice are tailored to individual customers with much greater precision.”  

Trend 3. Buyers’ Block in the quest for the best  

As holiday shoppers go in search of finding the perfect gift for friends and loved ones this season, six in 10 (60%) don’t know where to start and almost seven in 10 (69%) are worried they’ll make the wrong purchasing decision and regret it.  

With more than eight in 10 (81%) of shoppers wishing they could make decisions on what to buy more quickly, easily and confidently, and almost three quarters (73%) saying they would welcome inspiration, retailers can differentiate and drive revenue through inspiring and guiding consumers at each stage of their shopping journey, according to Accenture. 

However, as the peak holiday shopping season gets underway, a large group of consumers (68%) could face ‘Buyers’ Block’ – the effect of feeling overwhelmed by the number of options to choose from. The result? The majority (82%) say they will abandon their shopping carts due to frustration or indecision, and nearly one in three (33%) will shop elsewhere.  

What can retailers do to reduce Buyers’ Block?  Deck the malls! Retailers with physical stores could be set to gain this holiday season as 48% of consumers – rising to 53% of Gen X consumers (aged 44-59 years) – say they prefer to visit physical stores to see and assess products firsthand. Successful retailers will apply creativity to store layout to maximize the sales for each square foot of their allocated selling space. For example, a dedicated area for gift wrapping or personalization services, according to Accenture.  

At the same time, employees can play a role in the gift-giving game as “inspiration champions.” Innovative retailers are empowering store associates to display their expertise and help inspire and advise shoppers—that’s welcome news to the 40% of consumers who appreciate personal customer support.  

“It is clear that consumers are open to receiving advice and inspiration to help check things off their holiday shopping ‘to-do’ list,” said Wright. “But there’s a careful balance to strike between being the helpful and trusted advisor and bombarding them with too much choice and information.” 

Some retailers may opt for a less human touch. According to Accenture, ‘tis the season for tech to shine. Gen AI is poised to add a touch of sparkle to this year’s holiday shopping experience. It can act as a personal shopping advisor – a “guide by the side” of purchasing decisions – with human-like response abilities suggesting gift ideas, or advice on wrapping. The survey found that the vast majority (93%) of consumers agree gen AI could help them find better gifts, while 89% value the recommendations that gen AI tools provide.  

This holiday season, to that forced good cheer and artificial tree, you can now add artificial intelligence.