Are Consumers Primed for Holiday Shopping?

Marshal Cohen 
Chief Industry Advisor, Retail

Paul Gagnon 
Vice President, Industry Advisor, Consumer Technology

Joe Derochowski 
Vice President, Industry Advisor, Home and Home Improvement

Juli Lennett 
Vice President, Industry Advisor, Toys

Amazon’s introduction of a Prime Day in October 2020 made a mark on the season’s top holiday shopping days, coming in third, according to data from Checkout, NPD’s consumer receipt-based information. In 2019 and 2021, the third most popular holiday shopping day landed on a Saturday in December. 

If the past year has taught us anything, it is that shopping behavior has changed through the course of the pandemic, and retail shopping seasons look very different than they have in the past. Part of the reason is consumers are buying what they need when they need it. However, given the financial concerns heading into the 2022 holiday shopping season, and lingering memories of last year’s supply challenges, there is a real opportunity for October promotions, like Target’s Deal Days and Amazon’s Prime Early Access event, to impact this holiday shopping season like they did two years ago. Marshal Cohen, chief industry advisor for NPD says that the bottom line is this: if the deal is good enough, it will spark the consumer’s interest.

Even before it was officially announced, 60% of consumers planned to do some holiday shopping during the October Amazon Prime promotion event. 
– NPD 2022 Holiday Purchase Intentions Study

“Pre-holiday promotions will jump-start the holiday shopping season and boost the lagging fall season. The weather has just started to change across much of the country, and consumers who became accustomed to almost unlimited spring and summer sales will be looking for fall fashion deals. From a holiday perspective, these promotions will get consumers thinking about their holiday shopping lists and how to save money, as the cost of living continues to increase.” 
– Marshal Cohen, chief retail industry advisor

“The stretching of the holiday shopping season that began in 2020 has generally been beneficial for tech products. Black Friday was once a huge focus for tech, especially TVs, tablets, and gaming products, but has increasingly turned into a brutal price compression event over the years. The broader selling season eases pressure on retailers and brands to sacrifice profits, allowing consumers to spread their budgets out for these bigger ticket purchases.” 
– Paul Gagnon, consumer technology industry advisor

“The last (and first) time Prime Day occurred in October back in 2020, the toy industry grew 56% that week and growth continued each week for five weeks. Of course, some of that growth was likely the result of COVID-guilt spending, with parents trying to make up for all that their kids were missing out on. I think the early start this year, with many retailers pushing promotions, will be beneficial. However, similar to the 2020 Black Friday week declines, the October promotions might negatively impact some, though not all, of the weeks between Thanksgiving and Christmas.” 
– Juli Lennett, toys industry advisor

“Pre-holiday promotions reallocate the purchase of home products, moving up spending that might have occurred later in the season. Deal-oriented and early holiday shoppers will be encouraged to shop the pre-holiday promotions for small appliances and other home products that are always hot holiday and Prime-promotion sellers. Spending needs related to tailgating and Halloween can also be expected, as many consumers look to do some outdoor entertaining before winter kicks in.” 
– Joe Derochowski, home and home-improvement industry advisor

75% of holiday shoppers plan to spend the same or less than last year. 
– NPD 2022 Holiday Purchase Intentions Study

“The consumer always has an appetite for deals, so their here-and-now shopping mindset will be the hurdle that marketers need to overcome. Cautious and selective spending will ultimately win out, but effective promotions could affect some of the prioritization.” 
– Marshal Cohen

“Our research shows that TVs, AR/VR, and other key holiday products have a much higher level of price elasticity than other items. The need to shop deals is a prime motivator for tech shoppers during the holidays, so these early promotions are sure to be welcomed by consumers looking to save.” 
– Paul Gagnon

“Buying toys is not optional for parents, so getting a great deal is an added bonus and exactly what many parents need to get them to shop early. Due to rising prices this year, toy consumers will be looking for deals on specific items. Parents are focused on buying the perfect toys which, many times, means the precise toys on their children’s wish list. For these parents, it could be a combination of buying the hottest full-priced toy that their child specifically asked for and/or a “close-enough” toy on promotion.”
– Juli Lennett

“It’s always about consumers and their needs. The impact of early promotions on home product spending will be more contingent on how well promotions hit the mark on products that the consumer truly needs. Most consumers like deals, and there will be those who match the deals with their holiday shopping lists. However, those shopping for their own needs, particularly related to holiday gatherings and entertaining, will be less influenced by deals.” 
– Joe Derochowski

According to consumers, Black Friday is still the most opportune time to find the best deals (22%), followed closely by pre-November dates, like Prime Day (19%). 
– NPD 2022 Holiday Purchase Intentions Study

“Consumers are in acquisition mode. With the lingering memory of a year of supply challenges, if they can get the right product at the right price, they aren’t going to wait and hope for a better deal.” 
– Marshal Cohen

“The inventory situation will be a major wild card as overstocked retailers will be eager to exit the holiday season with a lower level of inventory in preparation for a difficult economic environment in 2023. If there is still a lot of inventory on hand, then it might become imperative to up the ante with promotions and capture consumers’ last-minute shopping attention.”
– Paul Gagnon

“Although we aren’t expecting product shortages this year, if parents see the toys they are planning to buy on promotion now, they will most likely buy it now. With that said, inflation will leave more consumers, especially lower-income consumers, cash-strapped over the holidays, which could cause them to wait for their last paycheck of the year to shop for toys. If early promotions go well for retailers, and they deplete more inventory than planned, they might not need to promote as much as we get closer to Christmas — which could surprise consumers.” 
– Juli Lennett

“There will always be consumers waiting for Black Friday sales, but that doesn’t mean they won’t shop the October sales. Regardless, there are some things that are always last-minute holiday purchases, like massagers, electric toothbrushes, and other high-quality products in the personal care category. This year’s timing of Christmas and New Year’s Eve also creates opportunity for more entertaining needs later in the season, further spreading out the holiday spending timeline.” 
– Joe Derochowski

Consumer perceptions of the economy and their own financial situations have fallen below levels seen in 2020, but 52% of consumers are less concerned about COVID compared to a year ago. 
– NPD 2022 Holiday Purchase Intentions Study

Pre-holiday promotions changed the shopping dynamics in October 2020, but Marshal Cohen points out that consumers were in a very different state of mind two years ago – even beyond current economic challenges. Today, they have more shopping options with fewer COVID-related concerns, which could mitigate the influence of early-season promotions. However, there is also more social engagement this year, which leads to increased product consumption.