Here are Medallia Market Research’s top 2023 holiday shopping predictions about when, why, and how consumers will spend their money this year.
This year we’ve experienced persistent inflation, the rise of AI and ChatGPT, TikTok’s continued dominance, and the evolution of increasingly complex omnichannel customer journeys. Without a doubt, these will shape how consumers spend their money this holiday season.
That’s according to our recent Medallia Market Research survey of over 2,200 consumers. As part of the study conducted in July 2023, we asked participants when they plan to shop, what they plan to buy, how they plan to do their shopping, who they plan to buy gifts for, and more. Their answers shed light on:
Based on the findings from this study, I’ve come up with the following top predictions of what retailers can expect to see unfold — as well as key steps brands can (and should) take to improve customer outcomes — this holiday shopping season.
As the effects of inflation on consumer behavior persist, we expect holiday shopping budgets to be tighter this year for many consumers. That said, shoppers will likely also spend about as much as they did last year — and that spending will be high in certain categories, like clothing and electronics. But don’t be surprised if extended family members and acquaintances get cut from the shopping list this year, as consumers double down on getting more for their closest loved ones.
Let’s dive into even more predictions about what’s to come in the months ahead.
1. 2023 holiday shoppers will spend about as much as they did in 2022, but on fewer gifts.
The total amount consumers say they plan to spend is up one percentage point from 2022 levels, while the total number of items they expect to purchase is down four percentage points from last year.
2. For the majority of consumers, setting aside money for holiday gift giving will be harder this year compared to the past, as a result of inflation.
Most of our survey takers (60%) say that rising prices will make budgeting for gift giving more challenging this year. At the same time, the same share of survey participants (60%) agree that it’s important to purchase something for their loved ones for the December holidays.
3. Consumers will focus on buying gifts for their immediate family and spend less on others this year.
Survey participants plan to increase spending on their significant others, children, and parents by five percentage points compared to last year, while they plan to decrease spending on teachers, neighbors, friends, and co-workers by 10 percentage points compared to 2022.
4. More shoppers will make purchases on Black Friday and Cyber Monday in 2023 than in 2022.
The share of consumers indicating they plan to purchase something for themselves jumped by four percentage points, up from 35% in 2022, and the share saying they plan to buy something for others increased by five percentage points, up from 45% last year.
5. Younger consumers (Gen Zers and Millennials) will participate in Black Friday and Cyber Monday shopping at higher rates than older consumers.
A greater portion of Millennial and Gen Z consumers say they plan to take part in two of the biggest online shopping events of the year this year.
6. The peak of holiday shopping will begin in early November and taper off in mid-December.
While some early shoppers say they will get started before October, the bulk of shopping is likely to take place between early November and early December, according to our insights.
7. Mass retailers and online-only retailers will be the big winners on Black Friday and Cyber Monday.
Nearly half of consumers say they plan to purchase from brands like Walmart and Target (49%) and a similar share (47%) plan to do their shopping with ecommerce brands like Amazon.
8. Online shopping will be a top channel for holiday spend in 2023.
The majority of consumers (67%) say they plan to do at least 40% of their shopping online.
9. Clothing and electronics will be the most frequently purchased gifts this holiday season.
Unchanged from 2022, the top gifts customers plan to buy are clothing (#1) and electronics (#2).
Brands that want to better connect with customers and generate more sales this holiday season should start by figuring out what matters most to customers, leveraging marketing channels where consumers are most likely to engage, tailoring promotions to account for generational differences and preferences, and experimenting with the timing of holiday promotions.
According to our survey, convenient locations, everyday low prices (outside of holiday deals), specific offers, and product variety are expected to be some of the top drivers of retail choice this holiday season.
As you plan your marketing mix for the coming holiday season, some key channels to consider include your brands’ owned channels (your company’s website) and outbound communications (email). These are two of the top channels shoppers say they plan to use to find out about promotions this year, followed closely by paid digital channels like search and traditional paid media like TV, according to our research.
Unsurprisingly, when it comes to deal discovery, Baby Boomers and Gen Xers report being more likely to be influenced by traditional channels like TV, print news, and magazines, while Millennials and Gen Zers are more likely to be swayed by social channels like TikTok.
Though it may seem counterintuitive, given the popularity of Black Friday and Cyber Monday, it turns out, most customers want more days of deals throughout the end of the year (67%), versus a minority (33%) who prefer a concentration of promotions in the days following Thanksgiving.
Check out our 2023 Holiday Shopper Trends infographic for even more 2023 holiday shopping predictions, including how shoppers plan to use AI tools like ChatGPT as part of their buying journeys.