holiday shopping gift boxes

Shoppers and retailers are gearing up for the holiday season amid rising costs and inflation-based challenges. But many — especially younger consumers — are still excited about shopping this holiday season and have plans to spend online and in-person as they shop for seasonal gifts.

Based on data from the Square and Afterpay Festive Forecast, these are top trends among consumers and retailers that will shape the 2022 holiday shopping season. 

Shoppers are feeling inflation but still spending.

Consumers are feeling the effects of inflation leading into the holiday season. To account for rising costs, some reported that they’ll be cutting back on general purchases, adjusting their budgets, and canceling subscriptions or activities to save money.

But inflation won’t stop many consumers from shopping this holiday season. Despite rising costs, most consumers still plan to spend: 42% of consumers plan to spend the same amount as last year; 25% expect to spend slightly more than last year; and 11% plan to spend significantly more. 

Gifts aren’t the only thing shoppers will be spending on. Consumers said that food and drinks (53%), Thanksgiving-related spending (45%), socializing (36%), and decorations (26%) are priorities for their holiday spending.  

Retailers plan to see an increase in sales even with higher prices.

Like consumers, retailers are feeling the effects of inflation this season. Seventy-four percent of retailers said that inflation has impacted their holiday preparations and their holiday approach, and half said that they plan to increase their prices before the shopping season. 

While outlook for the season is mixed, with 32% expecting business conditions to worsen and 41% believing conditions will improve, Square found that, overall, retailers expect sales to increase slightly this holiday season — a prediction in line with consumer spending plans.  

According to the Square and Afterpay Festive Forecast, three quarters of Americans will have their holiday shopping done by December. 

Shoppers will be on the lookout for value and deals.

With inflation top of mind, many shoppers will be searching for more value this year. Forty-four percent of consumers said that sales prompt them to purchase, and another 17% said that they’ll be looking specifically for more affordable gifts this year. Whether that means offering a buy-one, get-one promotion or holiday coupon codes across online and social platforms, shoppers will be looking for retailers that offer some additional value.

Shoppers are also leveraging new ways to help budget their holiday spending. One in eight holiday shoppers said that they’d sign up for a buy-now, pay-later service to help them budget their holiday spending, and one in six shoppers already plan to use a buy-now, pay-later service such as Afterpay to budget their finances and to help with immediacy of purchasing. 

Recommendations and in-store browsing will prompt holiday gift ideas.

Shoppers say that they’ll be getting their gift ideas from family and friends, from being in-store, and from websites, forums, or blogs. Whether you’re prepping your holiday window display, planning a holiday pop-up event, or getting your eCommerce store ready for the holiday season, be sure to curate a holiday-inspired theme and point shoppers toward gift ideas. 

Loyalty programs and insider perks can also help encourage repeat shoppers and customer recommendations this season. Square found that customers enrolled in a loyalty program were twice as likely to be repeat customers and spent an average of 37% more than non-loyalty shoppers.

Consumers reported that the most popular gift categories for the 2022 holiday season are gift cards, clothing and accessories, and children’s toys.

Retailers will leverage social and online shopping channels.

Social media platforms and online stores will be another driver for gift inspiration and purchasing this holiday season. Around one in four shoppers spot their gift ideas on Facebook (27%) and Instagram (24%), so having a social commerce strategy in place this holiday season can help expand awareness and sales.

Most retailers plan to enlist a number of online sales channels this holiday season, including social media (59%), an online store (45%), marketing campaigns (38%), and text messaging (16%) with conversational commerce

Just over a quarter of businesses (26%) don’t plan to use any online channels to sell this holiday season.

Marketing to Gen Z and millennials matters this season.

Of all holiday shoppers, Gen Z and millennials are the most excited about the coming holiday season. They are ready to see friends and family (29%), are looking forward to the celebratory atmosphere (24%), or are excited about the gifts (17%). While older shoppers are more likely to give presents that recipients find useful, Gen Z and millennials reported that they want to create something meaningful, maintain a relationship, or be admired by others. 

Gen Z is more likely to shop during Black Friday and Cyber Monday sales, while older shoppers are more likely to buy in December. Younger generations are also more likely to use buy-now, pay-later services such as Afterpay for purchasing, and they are more likely to browse and make purchases on social media platforms — all factors that can help inform holiday marketing efforts. 

This holiday season more shoppers plan to use buy-now, pay-later services when purchasing gifts online than in-person. 

Omnichannel commerce will drive holiday sales.

More than anything else, omnichannel commerce will be a driving force in holiday sales this season. Retailers know that consumers are browsing and shopping across new platforms and want a blend of online and in-person shopping, whether that’s at a brick-and-mortar or pop-up location, through an eCommerce store, with a mobile device, or on a social media platform.

Fifty-three percent of consumers said that they plan to purchase gifts online, while 47% prefer to make their holiday purchases in-store. Retailers will continue to adopt hybrid, omnichannel business models to meet these consumers where they are.

For more 2022 holiday shopping trends and data, read the full Square and Afterpay Festive Forecast report

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