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EY Study: Cost of Living Crisis Anticipates a Hunt for Holiday Shopping Deals
Consumers’ continued passion for seasonal sales is being fueled by the global cost of living crisis, driving shoppers to seek out more bargains as they try to make their disposable income stretch further. But despite the popularity of sales, there is a growing sense among savvy sales seekers of mistrust towards the real value of the discount or promotion on offer – according to the latest EY Holiday Shopping Survey.
Canvassing 13,000 global consumers on their views and attitudes towards the upcoming holiday sales season revealed that 69% say they enjoy sales events such as Singles Day and Black Friday and look forward to them (rising to 76% for those under 27 years old and 79% for those who have children). However, almost two-thirds (64%) are skeptical of festive sales, questioning the real value of the discount/promotion, with a similar number (58%) finding that the actual items they want to buy are not part of the promotion.
Highlighting the squeeze on disposable incomes, 45% of consumers surveyed globally are concerned about being able to pay for this festive season, rising to 49% of Gen Z consumers (18–27-year-olds), and 57% are planning to participate in sales because of their financial situation.
Reflecting the highly competitive market, the festive promotions started earlier this year, with many companies opening their seasonal sales window in September or October. Despite this, more than half of global consumers surveyed (52%) say they won’t start spending their holiday budget until later in the season.
Looking at country variations, the data suggests that many are trusting that better deals will emerge as the seasonal sales unfold and retailers become increasingly motivated to move inventory in preparation for the new year. In fact, six out of 10 consumer respondents say they will only be buying products that are on sale or promotion this year, and 67% are actively tracking the offers in the market to make sure they get the best possible deals –?rising to 73% for consumers with children.
Shoppers are also being more intentional about when and how they spend, reflecting for many the concerns about the cost of the season. Four out of five (41%) of those surveyed will be using loans or credit cards to fund their spending and buy-now-pay-later solutions will be an increasingly important way of deferring shopping costs, both online and in-store.
More consumers are determined to spend their money well this year. Overall, they are more interested in buying items that promise value that lasts beyond the season. For example, 34% of respondents plan to spend more on technology and 58% plan to reuse last-year’s festive décor. They are also making their holiday budgets go further by, for example, skipping holiday foods and beverages that feel a little too indulgent.
For many consumers festive shopping behavior has nothing to do with bargain hunting. For example, 48% of global consumer respondents say if they find the ideal priority gift they will buy it, whether it is on sale or not.
Georgiana Iancu, Partner, coordinator of the Indirect Tax practice and leader of the Retail and Consumer Products sector, EY Romania: “In the context of the current cost of living crisis, consumers are becoming increasingly cautious and skeptical about the real value of discounts and promotions. We are observing a significant shift in purchasing behavior, where the focus is on finding the best deals and maximizing the value of every amount spent. Despite the enthusiasm for discount events, consumers are more calculated and attentive to the authenticity of the offers. It is essential for retailers to meet these expectations through transparency and genuine offers to gain consumers’ trust and loyalty.”
The survey reveals that physical stores are still where most consumer respondents (68%) plan to shop this festive season. Many consumers want to see, touch and physically experience a product before they commit to a purchase. In that regard, stores provide a level of confidence that is hard to replicate in the digital space.
However, the digital experience is evolving fast and shrewd, savvy consumers will happily switch between channels to get the optimal deal.
Social media platforms will be significant sales channels in their own right this season, with Chinese consumers leading the way – 50% of Chinese consumer respondents plan to make purchases via shoppable social media, compared with 24% in the US, and 17% worldwide.
Younger consumers are likely to be the most active shoppers this festive season. In fact, about 40% of Gen Z respondents are planning to increase their spending across nearly every category, from clothing to technology to experiences.
The younger generations are prioritizing products that are organic or sustainably sourced, because more than any other generation they actively seek out brands that align with their values. More than a third of Gen Z respondents (35%) plan to purchase second-hand goods as gifts, either to stretch their budgets further or to invest in higher-quality goods that they couldn’t afford new. Some brands are already capitalizing on this trend by establishing or investing more in resale platforms for their own goods.
One opportunity for companies this festive season is to meet Gen Z’s expectations for convenience. They are more likely to value faster options, free shipping and flexible delivery windows compared to other generations. For example: 40% of Gen Z consumer respondents value two-hour or same-day delivery, compared to just 25% of baby boomers (60–65-year-olds).
While these expectations are challenging to meet in a way that is profitable, they also present opportunities. Nearly half of Gen Z respondents shared that they would buy something for themselves when shopping online to meet a shipping threshold, compared with 35% of those over 60 years old. Companies that fine tune their shipping thresholds with this in mind can drive additional purchases and increase their margins.