70% US consumers expect less than 30% holiday season discounts: Study

Seventy-five percent of consumers further indicate they are happy to pay full price for gifts that the recipient “really likes,” according to a report titled ‘The State of Consumer Spending: Holiday 2022’ by data analytics platform First Insight. Compared to 2020, consumers’ expectations around discounts are lower this year across categories. On average, 53 per cent of shoppers will be enticed to purchase with a 0–30 per cent discount compared to only 41 per cent in 2020. This finding indicates that retailers may be over-discounting this holiday season.

“Retailers are second-guessing themselves into the red this holiday season by reverting to the same, tired promotional formulas that would be unnecessary with the right data,” said Greg Petro, CEO, First Insight. “Acting on instinct instead of with predictive consumer data means retailers have only themselves to blame for the tsunami of promotions that are sweeping the country. And to think that just last year, with supply chain shortages, retailers said that deep Black Friday discounting was a thing of the past.”

For the perfect gift, the willingness to pay full price is found not only among the wealthiest or oldest consumers. Across household income breakdowns, 82 per cent of consumers in the $200,000+ bracket, 83 per cent between $50,000 and $199,000, and 77 per cent with under $50,000 all report they will pay full price for gifts the recipient desires. On a generational basis, 87 per cent of Gen Z, 83 per cent of millennials, 75 per cent of baby boomers, and 73 per cent of Gen X say the same. Furthermore, 82 per cent of men and 77 per cent of women agree that they will pay full price to secure the right gift.

The report further reveals that shoppers overwhelmingly vote “no” to paid returns. Seventy-five percent of shoppers say they would be deterred from shopping at retailers that charge for returns. This sentiment is strong across income and generational demographic breakdowns, with 92 per cent of the most affluent shoppers in the $200,000+ bracket rejecting retailers with paid returns, along with 79 per cent of those earning $50,000–$199,000, and 70 per cent of shoppers with average household incomes below $50,000. Generationally, baby boomers are the most adamantly opposed at 84 per cent, followed by Gen X at 76 per cent, Gen Z at 71 per cent, and millennials at 69 per cent.

With the National Retail Federation predicting that $158 billion worth of merchandise will be returned this holiday season, many retailers no longer offer free returns or are considering implementing fees for returns while also shortening their returns window. First Insight’s report indicates that 42 per cent of all consumers expect a returns window of 30 days from the date of purchase, with the remaining 58 per cent expecting at least 60 days.

“Retailers can no longer survive without actionable data,” Petro added. “Predictive customer data is available and easy to access and our customers—retailers and brands—have a competitive advantage by capturing voice of the customer data that can help them maximise their margins across the business, from a more desirable product assortment to more competitive pricing and fairer returns policies.”

Fibre2Fashion News Desk (NB)