Monday, June 17, 2024

Consumers ready to spend, retailers poised for growth

Data from Square and Afterpay’s Annual Festive Forecast reveals consumers and businesses are expecting strong holiday spending in 2023.

After a year of economic uncertainty driven by inflation and recession concerns, new research from Square and Afterpay indicates “consumer confidence is on a stable trajectory, with 27% of consumers planning to spend more this holiday season compared to last year. And that positive sentiment is shared by businesses, with two-thirds (66%) of retailers and hospitality venues expecting sales to increase this festive season, and many building new revenue streams to secure more sales.”

While consumers intend to shop more this season, savings remains a priority. The Square and Afterpay Festive Forecast reports “71% of Australians have indicated that they intend to shop for cheaper alternatives as they look for deals to avoid increasing costs. This aligns with most businesses’ plans to offer an average discount of 12%. To engage with consumers, merchants are leveraging various omnichannel tactics such as hosting a curated holiday event (43%) and offering special deals through loyalty programs (23%).”

Increased desire for payment flexibility has meant consideration of credit card use for gifting purposes is decreasing while ‘Buy Now, Pay Later’ (BNPL) preference increases. “As consumers seek more flexible options at checkout, 16% of Australians are considering the use of ‘BNPL to purchase gifts, with budgeting and money management cited as the key benefits of using BNPL.”

Key Festive Forecast highlights include:

  • Giving season: The most popular gifting categories are Gift Cards (23%) followed by clothing, shoes and accessories (15%) and kids, babies, toys (13%) showing that while some Aussies are picking gifts, others are leaving the choice up to their gift recipients.
  • Early birds get the worm: 30% of consumers plan to have all their holiday shopping done by the end of October. One in three (36%) plan to shop in November, with 11% waiting for Black Friday or Cyber Monday to grab a deal.
  • Treat yourself: Compared to older consumers, 19% of Millennials plan to prioritise themselves with a gift for the holiday period as a reward for themselves, and 16% of Gen Z are planning some retail therapy.
  • Maximising savings: Due to the current economic climate, 71% of Aussies say increasing prices are making them shop for cheaper alternatives.
  • A mild holiday discounting season: Nearly three in four (71%) merchants are confident in their discounting strategy and have no plans to change their sales offerings, with an estimated 12% average discount that will be offered.

With these findings in mind, Square and Afterpay offer two key ways businesses can prepare for the holiday season:

  • Encourage shoppers to come into stores by offering unique experiences or exclusive offers and merchandise, enabling your business to expand its revenue streams.
  • Consider shopping and wishlist apps as new social channels to increase your brand discovery, promote products, and reach new consumers.

For more holiday insights unwrapped, visit here. For SMB-specific insights, visit here.

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