Navigating the Holiday Season: Striking a Balance Between Caution and Marketing Triumph
Embrace the season: As consumer spending rebounds, brands navigate uncertainty to deliver a joyful holiday experience
Amid the lingering effects of the pandemic and various disruptions, there are signs that shoppers are gearing up to spend more during the holiday season. While financial concerns, such as inflation, remain on people's minds, marketers have an opportunity to end the year on a positive note by striking the right tone amidst the uncertainty.
According to Deloitte's 2023 holiday retail survey, consumers are projected to spend an average of $1,652 this holiday season, marking a 14% increase compared to the previous year and surpassing pre-pandemic levels for the first time. As Thanksgiving and Black Friday approach, these optimistic forecasts are likely a relief for marketers. However, the pressure to perform well after a tumultuous period has generated additional anxiety for brands, as noted by David Sant, head of client success at JuiceMedia.IO.
Sant mentioned that due to current global events and uncertain economy, there is a sense of caution among people. As a result, there is increased pressure to make Q4 successful, with emphasis on this year's unique importance.
In 2023, many brands aim to strike a balance between a lighthearted tone and affordability in their communication. Additionally, some brands are banking on technology to appeal to digitally-focused younger audiences. Moreover, there are noticeable changes in consumer preferences, such as a renewed interest in in-person shopping, which will lead some companies to prioritize fundamental approaches.
The gift of value
Marketers are facing apprehension due to consumer sentiment. According to Deloitte, as inflation persists, 75% of shoppers anticipate higher prices compared to the previous year. Additionally, savings rates have decreased and student loan repayments have resumed. Just like last year, marketers aiming to attract consumer spending not only need a pertinent value proposition but also have to adapt to evolving customer needs.
According to Brian McCarthy, a principal in Deloitte's retail practice, a significant majority of consumers surveyed are anticipating higher prices but are not allowing that to affect their spending habits. Instead, they are adjusting their budgets to make the most of their money.
To effectively reach consumers this year, marketers will need to align their messaging with the prevailing concerns around financial strain. This means refraining from using flashy and extravagant tactics of the past and instead adopting a more restrained tone similar to that observed in 2022.
The tonality of the creative is less muted than last year but not as triumphant as in previous years where people are boasting.
To engage stressed-out shoppers, emotional appeals are effective. Sam’s Club recently launched a holiday campaign with Arnold Worldwide, focusing on promoting togetherness instead of materialism. Amazon is also using emotional appeals with their global campaign, "Joy is shared," which combines themes of friendship and nostalgia and includes a version of The Beatles' "In My Life."
The heartwarming impact of trendy technology is evident in certain initiatives. Coca-Cola's holiday campaign, "The World Needs More Santas," promotes the idea that anyone can embody the spirit of Santa through acts of kindness. As part of their "Create Real Magic" platform, the company plans to incorporate artificial intelligence. Additionally, Lego is utilizing augmented reality to organize a snowball-throwing contest that spans across the Atlantic.
Others are adapting to the current situation by placing a stronger emphasis on achieving savings. Target recently initiated a seasonal campaign driven by the guiding principle of "However You Holiday, Do It For Less." Similarly, JCPenney unveiled a holiday marketing playbook in October that centers around opportunities for savings and aligns with the department store's broader strategy of supporting working families and helping them make their money go further.
According to Gartner's 2023 Holiday Marketing Guide, as brands focus more on affordability, marketers can stand out by prioritizing environmental, social, and governance (ESG) goals to differentiate themselves. This strategy can be particularly effective among values-driven shoppers, as 38% of them reported a positive change in their attitudes or behaviors towards a brand when its ads emphasized inclusivity. Additionally, both Gen Z and millennials consider a brand's values when making purchase decisions.
Similarly, Gartner analysts emphasize that, instead of revealing commitment to a new cause, brands should use this holiday season as an opportunity to showcase ongoing efforts. It is crucial for brands to have a plan in place to address any potential backlash and be prepared to escalate their responses if necessary.
“I believe that all marketers have reservations about being featured in the headlines during this holiday season,” stated Kassi Socha, an analyst director at Gartner. "Our primary recommendation is to refrain from initiating a new campaign or establishing a new central theme during the holidays when there is a significant influx of activity. Instead, it is crucial to focus on conveying the progress made thus far."
Time for inspiration
Shoppers are increasingly showing interest in traditional savings opportunities as they check items off their holiday shopping lists. According to Deloitte, promotional events during Black Friday-Cyber Monday week are projected to attract 66% of shoppers, compared to 49% the previous year. Additionally, nearly one-third of shopper budgets will be allocated to the last two weeks of November. McCarthy commented, "Retailers have been encouraging early holiday spending in previous years, but this year, spending will primarily occur in November and December."
According to Gartner, while consumers are not starting their holiday shopping as early this year compared to 2022, 19% of them now report shopping for holiday gifts year-round, an increase from 16% last year. This has influenced when brands launch their campaigns and choose the channels to advertise on, including holiday TV ads. Based on EDO's Holiday TV Outcomes report, consumers were most likely to engage with TV ads from direct-to-consumer clothing brands the week after Christmas last year. In contrast, department stores like Walmart or Kohl's experienced peak TV ad engagement in mid-October, indicating that starting holiday campaigns earlier could be advantageous.
Kevin Krim, president and CEO of EDO, stated that many categories of advertising experience increased engagement rates during their holiday campaigns when they begin in October. Response rates, measured by people searching for the brand, products, and visiting websites, also tend to be higher during this timeframe. According to a study by Deloitte, social media is also gearing up for the holiday season, with 34% of consumers planning to use it for their shopping. Gen Z consumers are particularly active in seeking gift-giving inspiration on social media, making it an important platform for brands to target and raise awareness among the younger generation, as advised by Imani Albert, associate strategy director for Movers+Shakers.
Albert emphasizes the importance of starting holiday marketing early, as Gen Z is already discussing, preparing for, and embracing the festive season in advance. This early marketing is crucial in order to provide people with gift ideas, particularly in the realm of social media.
In terms of holiday marketing trends on social media this year, Albert predicts that gift guides will be highly sought after, as Gen Z is shifting towards intentional gifting instead of a generic approach. Consequently, partnering with influencers will be a common strategy employed to engage with consumers seeking guidance and recommendations.
Albert is optimistic about the recently introduced TikTok Shop as a means to enhance the shopping journey, despite the lackluster results thus far. TikTok remains a favored platform for Gen Z consumers, and its commerce feature, which was officially introduced in the U.S. in September, has the potential to provide brands with a comprehensive shopping experience. Albert encourages brands to join TikTok Shop, as the algorithm tends to prioritize such posts.
Make in-store shopping merry
In terms of preferred shopping destinations, online-exclusive sellers and large retailers have emerged as the favored choices among consumers, with 63% and 53% respectively, as stated by Deloitte. These figures align with the trends observed in 2019, according to the consultant. Furthermore, in-store purchases have rebounded to pre-pandemic levels, accounting for 37% of consumer expenditures in 2023.
Several brands are taking advantage of the growing interest in tactile experiences among consumers. JCPenney has introduced more in-store destinations to encourage larger gift purchases. Target is bringing back experiential marketing with a pop-up called Target Wonderland, which will travel to multiple cities, while also increasing its focus on physical store activations.
According to Gartner's report, the resurgence of in-store shopping presents a significant opportunity for CMOs to combat declining store profitability. Brands should enhance their in-person experiences by offering convenient services such as same-day delivery and curbside pickup and returns. These added aspects could make a difference for consumers who are faced with numerous clearance sales, according to Gartner's Socha.
"Socha stated that by offering a pop-up experience, an innovative in-store shopping experience, or a means to connect with the brand in the real world, it would have a profound impact on consumers. She highlighted the desire to physically engage with a brand, which has grown significantly in the aftermath of the pandemic."
