The Inflation Wrench in Retailer’s Holiday Plans
Citing inflation, more than a third of U.S. shoppers say they expect to spend less this holiday shopping season, according to Digital River’s new research, which explores online spending habits, payment trends and what consumers are demanding from online retailers.
Through the consumer survey and research, the company, a global commerce solution for established and fast-growing brands, aimed to reveal how rising costs and inflation have impacted U.S. consumer behaviors. Conducted by Opinium, the research looks at changes in consumers’ finances and spending over the past six months.
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The greatest impact to spending was shown to be aimed at special occasions, including vacations, and holidays. Due to inflation, 67 percent of survey respondents say they have reduced spending on non-essential items in the last six months, which includes holiday shopping and leisure travel. Forty percent are spending less on summer vacations, including 49 percent who are reducing travel expenses.
During this time, online shopping remains high, as consumers actively look to support budgets through decreased spending. For 42 percent of U.S. adults, this means making an online transaction at least once a week with 39 percent saying they have shopped online more frequently in the last six months. And 54 percent say they plan to increase online shopping due to convenience.
At the same time, consumers say they have noticed an increase in prices as they shop online and 47 percent have reduced their online shopping as a result and 35 percent have tried to find discount codes Another 29 percent say they have used comparison sites more frequently. Almost two-thirds of respondents say they want more help from retailers to deal with inflation.
“We’ve seen how inflation has impacted our economy: consumers told us they are decreasing their spending across the board, most notably on special occasions, including holiday shopping and vacations,” said Ted Rogers, chief revenue officer at Digital River. “However, our research has shown the pace of online spending isn’t expected to slow down despite the squeeze on finances. Brands must ensure they have optimized their digital stores to make the shopping journey as transparent and friction-free as possible, making sure consumers aren’t surprised by any extra costs.”
Without help, the writers of the report say they expect online shopping will fall in popularity, seeing that 49 percent of consumers agree that online purchases would be the first to go if they needed to reduce their spending.
Buy now, pay later has also increased due to inflation, according to the survey. Of the consumers who were already using BNPL, 64 percent told the company they have used this payment method more often in the last six months when buying online. For 48 percent of consumers, this increase in use was due to “squeezed finances” while 44 percent cited increased product costs. Thirty-one percent of credit card users also reported using their card more with 44 percent citing the convenience, 42 percent reporting tighter budgets and 40 percent citing increased product costs.
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