How the financial and physical impacts of the pandemic will influence consumer holiday spending
The constant shifts in retail this year have placed a big question mark over what to expect for this holiday season. Regardless of those uncertainties, many retailers still depend on Q4 and holiday sales to make their year. Nielsen hopes to shed at least a little light into the months ahead by identifying five 2020 holiday season consumer groups and their anticipated spending habits.
The Five Consumer Groups
Constrained and Restricted
These are the consumers facing both economic constraints and governmental restrictions. Their financial situation could have already been tight, or become tight as a result of unemployment or underemployment because of the pandemic. They have less money to spend, and less freedom to travel or visit shops in person due to local restrictions on businesses and gatherings.
Constrained but Free
Likewise, this category of consumers is also dealing with financial constraints. However, they live in areas with less restrictions, so they are more likely to shop in-store and participate in holiday gatherings or travel.
While neither constrained or restricted, consumers in the Cautious Middle lack confidence in the future and will be careful around their spending and who they celebrate with.
Insulated but Restricted
These consumers have not experienced negative financial impacts from the pandemic, but are limited by physical restrictions. Unable to travel or participate in large gatherings, this group may spend more or in different ways to compensate.
Insulated and Free
Unencumbered by financial or physical limitations, these consumers are the most likely to reflect pre-COVID shopping behavior. They could also spend more to make up for foregone travel or spending earlier in the year.
Anticipated Spending Habits
With these five groups defined, it is clear that retailers have to prepare for a wide variety of consumer situations, and therefore shopping behaviors.
Shopping for Deals
Our recent Holiday Shopping and Pricing Survey found that 70% of consumers will actively seek out promotions and coupons while conducting their holiday shopping. 46% also expect retailers to offer more discounts than last year. With more free time and less money, shoppers are willing to put more effort into getting a good deal on their holiday purchases.
With more people staying home this holiday season, Nielsen predicts that homemade gifts and home cooking will see major growth this year. While constrained and cautious consumers may turn more to DIY gifts to save money, insulated consumers will be seeking out small splurges for premium at-home experiences.
eCommerce Boom Continues
There’s no sign of the ecommerce train slowing down. Cautious and restricted consumers will continue to shop more online than they did in pre-COVID times. According to our survey, 30% of consumers anticipate spending more on online shopping than last year.
Having a Successful Holiday Season
These emerging holiday season consumer groups present retailers with both an opportunity and a challenge. Retailers that can align the right messaging, with the right pricing and the right products to entice the individual holiday consumer categories will be well positioned to capitalize on holiday sales this season.