2022 Holiday Spending and Pricing Predictions

A look at what the experts are predicting for an unpredictable holiday season

We’re well into November and the holiday shopping predictions are flooding the industry news feeds. With the pandemic mostly behind us, retailers are hopeful for another strong year of seasonal sales. But will inflation dampen 2022 holiday spending?

It seems this year there is no one-size-fits-all answer. Let’s look at what the experts had to say about some of the biggest holiday spending days of the year and their overall global holiday sales predictions.

Holiday Meals

No surprises here — Thanksgiving will be more expensive this year. Consumers have already dealt with rising grocery prices all year, and although inflation showed signs of slowing in October, shoppers will still be paying more for their turkey meals than before.

According to IRI, prices of traditional Thanksgiving items are up 13.5% over last year. However, the higher costs do not seem to be impacting the festivities too much. Seventy-six percent of U.S. consumers said they are returning to pre-pandemic celebrations, and 38% say they intend to buy the same amount of groceries despite higher prices.

What is changing is how they shop for the necessary meal items. Consumers started their Thanksgiving shopping early, keeping an eye out for deals and grabbing products when they are on sale. A survey conducted by Morning Consult found that of consumers planning to purchase a turkey, nearly 3 in 4 intend to buy one on sale.

What does this mean for retailers? It means those that ran promotions on traditional Thanksgiving foods, and ran them early, definitely had the opportunity to grab holiday food sales and market share from competitors. Randalls’ promotion for a free turkey with a purchase of $75 or more is a great example of how retailers can leverage promotions to entice holiday shoppers this season.

With Christmas, Hanukkah and other winter celebrations just around the corner, Thanksgiving sales metrics will provide a good indication of how U.S. consumers will be shopping for those festivities as well.

Speaking of… while Americans may be determined to keep their holiday feasts as big as ever, the same can’t be said for consumers in the United Kingdom. As inflation has not yet shown signs of slowing, Brits will be looking to cut food and drink costs in order to budget elsewhere for the holidays.

According to research from Pureprofile, 33% of consumers plan to look for cheaper food alternatives. The survey also revealed the average Christmas food and drink budget has decreased by £5 from last year. In addition, a recent survey from Accenture found that 70% of U.K. consumers are planning smaller celebrations compared to last year.

Black Friday

Inflation seems to have put a bit of a damper on predictions around Black Friday and the other big holiday shopping days. With consumers starting their shopping even earlier this year to avoid supply issues, many will be checking items off their lists before Black Friday even rolls around.

Tight budgets and recession fears may also result in consumers holding back on their spending or searching out the best deals, whether on Black Friday through Cyber Monday or otherwise. Amazon’s rather lackluster Prime Day results could also be a sign of cooler consumer spending on the big holiday sales days.

Adobe’s holiday shopping days data predicts a measly 1% growth for Black Friday online sales and a decrease of $5.1 billion on Thanksgiving Day. However, Cyber Monday is expected to make up for it, with a predicted growth of 5.1% in spending.

Across the pond, many anticipate the cost-of-living crisis will have a major impact on Black Friday spending. According to ParcelHero, spending on Black Friday could fall by roughly 15% this year, not only due to inflation but also because retailers have less wiggle room with their margins to offer huge discounts and generate traffic.

2022 Holiday Spending Overall

Predictions for the holiday shopping season as a whole are a mixed bag. While consumer spending in the U.S. has largely remained resilient despite inflation, consumers across Europe will be making further cuts if push comes to shove.

The National Retail Federation has an optimistic forecast for the 2022 holiday season in the U.S., with predicted sales growth numbers between 6% and 8%. Despite inflation pressures, NRF believes consumers will leverage savings and credit in order to have the holiday season they desire.

Meanwhile, research from Deloitte suggests inflation will flatten overall holiday spending growth, with the projected average spend per U.S. household nearly the same as last year. To balance out higher costs, consumers expect to buy fewer gifts, as well as spend more on experiences than they did in 2021.

A global survey from IBM found that nearly half of consumers will reduce their holiday spending if inflation continues to increase prices. This number is even higher among consumers who are already struggling against inflation. If pushed to making cuts, 36% say they will reduce spending on physical goods.

How to Win the Holidays with Pricing

Retailers looking to warm up what may be a cooler holiday shopping season need to focus on providing customers the pricing they want. Consumers are willing to wait and shop around for the best deals. Retailers need to run effective, targeted offers that will meet consumers’ expectations and boost promotional goals simultaneously.

Building up customer loyalty and protecting price perception are additional critical priorities for retailers this holiday season. Loyalty programs, personalized discounts and targeted experiences can go a long way toward retaining current customers.

Pricing can also be a strategic lever for retailers looking to deal with inventory imbalances. Consumers are willing to buy alternative brands and products this holiday season to stretch their dollars a bit further; all they need is a little pricing incentive to direct them to choose the excess inventory.

For more reading on 2022 holiday shopping and pricing trends, check out Retailer Survey Reveals 2022 Holiday Pricing Insights.