Changing Consumer Behaviors in an Evolving Economy: What Retailers Should Expect This Holiday Season

With the holiday season in full swing, retailers are already navigating an economic landscape marked by shifting consumer behaviors. According to Deloitte, holiday retail sales are expected to increase by more than 3 percent this year, a long-awaited sign that we're finally approaching pre-pandemic levels.

After weathering years of economic uncertainty and inflation-impacted prices, consumers are now feeling some relief with the added benefit of a Fed rate cut. Retailers must adapt to capitalize on a potentially lucrative season while implementing lessons learned from the last few years.

Make it Worth Their Time, Not Just Their Money

Even with the anticipation that wallets are opening wider, the last four years have taught us that consumers have become more selective about where and how they spend their money. They appreciate memorable interactions and quality service, making it imperative to create engaging experiences that resonate on both emotional and practical levels.

When creating a campaign, the idea of a deal shouldn’t focus solely on cutting prices; rather, retailers must focus on delivering value that can deepen the relationship between brand and consumer. Retailers need to zero in on key differentiators such as exceptional customer service, ease of returns, or providing seamless access to product information. Consumers are looking for a unique shopping experience. By leaning into those differentiators, retailers can provide value beyond a lower price power.

Unify In-Person and Online Experiences

Largely out of necessity, 2020 saw a 43 percent increase in online shopping. While many consumers have returned to in-person shopping, a significant portion now prefer the convenience of e-commerce. With the continued growth of social commerce across multiple prominent platforms, it’s important that messaging and strategies are unified across all touchpoints.

In an effort to foster connections with consumers who prefer to visit brick-and-mortar stores, winning retailers are exploring options for in-person experiences like pop-up shops, experiential displays, and events that create unique experiences that cannot be replicated online. Still, a strong digital presence is also vital for ensuring the success of these endeavors by regionalizing or localizing marketing campaigns.

With technology at their disposal, retailers can create memorable shopping experiences that extend beyond physical stores. Augmented reality (AR), virtual try-ons, and interactive social media campaigns can provide consumers with engaging ways to interact with products before making the perfect holiday purchase.

The ability to connect consumer experiences across digital and physical channels is pivotal for growing loyalty and making purchases convenient for consumers of every kind.

Build Loyalty With Tech

Consumers are always on and always connected. The ability to engage through multiple channels — whether in-store, online, or through social media — is crucial to understanding their behaviors and meeting them where they are. With today’s technology, retailers also need to put an emphasis on using data analytics to understand consumer preferences and tailor offerings accordingly to make these moments memorable.

With an abundance of insights available, brands can tailor their interactions to ensure every consumer feels acknowledged and appreciated during the hectic hum of the holiday season. Artificial intelligence's ability to analyze data is not only faster but also more efficient, unlocking the potential for deep personalization. This goes far beyond just addressing consumers by name or suggesting products; retailers can craft unique content and stories that resonate with each individual.

The typical ebbs and flows of the economy present both challenges and opportunities for retailers during the busiest season of the year. By adapting to evolving consumer behaviors and focusing on delivering exceptional, unified experiences — whether online or in-person — retailers can navigate this dynamic landscape and position themselves for success.

David MacDonald is executive vice president, head of retail and commerce practice at Razorfish, a marketing transformation leader.