Online retailers continue to devour consumers’ attention — and dollars — at an accelerating rate but the in-person shopping experience has made a marked recovery since pandemic restrictions isolated the purchase process to a mostly at-home routine.
Despite ongoing inflationary pressures, and a recent election in which most voters put economic concerns at or near the top of their list of considerations when it came to choosing candidates, U.S. consumers are set to spend at record levels over the upcoming winter holiday shopping season.
But where they choose to spend those dollars is a decision influenced by a wide variety of factors that don’t easily boil down to matters of price and convenience.
Where those holiday shopping dollars go
Holiday spending is set to reach a record $1,638 per shopper this year, a 7% increase from last year and 15% above 2022, according to a report released last month by PricewaterhouseCoopers. Consumers will remain selective, though, with 59% saying inflation is likely to impact their budget and 57% saying their finances are strained, per the report.
Brick-and-mortar retail outlets are continuing their post-pandemic comeback, according to the report, with 45% of consumers planning in-store purchases over the winter holiday shopping period, up 2% from last year and the highest level since 2019.
While in-store shopping experiences have been on the rise since widespread COVID-19 restrictions were lifted, the expected rate of in-person spending through the end of the year is likely to still come in down 14% from a decade ago. Consumers told PricewaterhouseCoopers they are more excited about heading out to shop on Black Friday this time around, with 22% of shoppers reporting they’ll be in stores the day after Thanksgiving. That marks a 3% rise over 2023 and the first increase since 2018, but is well short of the 60% of consumers who ventured out for Black Friday shopping 10 years ago.
Kelly Pedersen, global retail leader for PricewaterhouseCoopers, said among the drivers of in-person shopping engagement will be a common concern about online holiday purchases.
“I wouldn’t be surprised if the in-store traffic this holiday season is a pretty big boon, because of people just generally returning to stores more and there’s some pessimism towards getting deliveries in time,” Pedersen said in the report.
Buying online still king of the hill
To be clear, online shopping is continuing to crush it alongside the expected increase of in-person transactions.
According to a new forecast from Adobe Analytics, U.S. consumers are set to spend a record $240.8 billion in online shopping this holiday season (Nov. 1 to Dec. 31), representing 8.4% growth over last year. In the 2023 season, shoppers spent $221.8 billion online, up 4.9% from 2022.
Holiday shoppers were also expected to start making seasonal purchases earlier this year and will use their mobile phones rather than desktop computers to transact over 52% of their online buying, a record level, per Adobe’s analysis. And retail discounts will be among the primary drivers of consumer decisions when it comes to holiday purchases.
“The holiday shopping season has been reshaped in recent years, where consumers are making purchases earlier, driven by a stream of discounts that has allowed shoppers to manage their budgets in different ways,” Vivek Pandya, Adobe Digital Insights lead analyst, said in the report. “These discounting patterns are driving material changes in shopping behavior, with certain consumers now trading up to goods that were previously higher-priced and propelling growth for U.S. retailers.”
Discounts, however, are only one part of the purchase decision equation.
Shopping is more than a transaction
University of Utah professor Tamara Masters is the director of the undergraduate marketing core and a marketing department lecturer who specializes in research focused on consumer judgment and decision-making influences and persuasion.
In a Deseret News interview, Masters said the nuance of shopping experiences extend far beyond the object.
“When we are purchasing things, it isn’t just about buying the goods, but buying the benefit,” she said. “And part of that benefit is a feeling of happiness.”
Masters said the most successful retailers are recognizing and embracing the power of experiential marketing, a strategy that aims to create a memorable experience connected to a product, brand or retail outlet.
“Individuals are always trying to find a happy place, feel more fulfilled, be emotionally rewarded,” Masters said.
When consumers engage with in-person shopping, they put themselves in a setting where interactions with other people and the environment provide feedback instead of just the isolated act of a purchase transaction.
“They want the experience and positive uplift,” Masters said.
Winter holiday shopping is a particularly fertile time for brick-and-mortar retailers to cultivate a broader experience for customers, according to Masters, and it’s one that typically aims to leverage the power of nostalgia.
“There is so much more experiential opportunity that naturally happens with holiday shopping,” Masters said. “Decorations and lights … music that takes you back to non-stressful times. Christmas and Hanukkah or whatever you celebrate are just happier times, without the stress of adulthood.
“Caring for others and sharing with them, that altruistic part of it that just feels good when it’s connected with the holiday and childhood memories of being happy and carefree … people love to capture those.”
Masters said retailers are well aware of the power of the in-person experience and the inherent advantage it can provide over digitally mediated online shopping. Some of the country’s biggest retailers, she noted, have reversed course on staffing reductions in recent years, recognizing that providing more high-touch interactions can help bolster the bottom line.
“The data is clear on this,” she said. “Consumers are 50% more likely to make a purchase when an item is brought to them and they’re getting a feeling of being more cared about and welcomed. People are expecting it now and they want it and crave it.”
That expectation and craving is very much on the radars of online retailers who are trying to figure out how to transfer the magic of the in-person shopping experience into the online realm.
Online retailers try to get real
E-commerce giant Amazon launched its own virtual holiday shop earlier this month, Amazon Beyond, complete with seasonal decorations and a holiday music soundtrack playing in the background. Shoppers can navigate to different views within the computer-generated 3D store environment and peruse “shelves” stocked with electronics, kitchen items, personal care products, stocking stuffers and more.
The retailer also created virtual showrooms for brands like Lego, Disney and Star Wars.
“We’re always innovating to enhance the shopping experience and empower customers to discover products in easy and fun ways,” Carmen Nestares Pleguezuelo, vice president of North America marketing and Prime Tech, said in a statement. “With the Virtual Holiday Shop, we are excited to transport shoppers into a new immersive experience where they can browse over 300 of the most coveted gifts and toys of the season.”
While Amazon and others work to replicate the qualities of in-person shopping, Salt Lake City’s Downtown Alliance executive director Dee Brewer notes the abundance of retail and broader IRL experiences awaiting those who decide to head downtown over the winter holiday shopping season.
Building a bigger, better and broader customer experience
Brewer said downtown customer traffic grew by 11% last year as the city’s central business district played host to 20.2 million visits in 2023. Visitor volumes in all customer segments expanded and some 63% of that traffic was made up of those who do not live or work downtown. Brewer said Salt Lake City continues to rise as a regional destination as the biggest metro area for 300 miles in all directions and draws customer traffic from across Utah and neighboring states like Wyoming, Idaho and Nevada.
Brewer said the power of in-person experiences is very much on the minds of the Downtown Alliance as the nonprofit group continues the work of cultivating and supporting customer activity in Salt Lake City’s core. That includes new programming aiming to fill the gap left by the temporary suspension of the holiday light displays at Temple Square while the renovation of the Salt Lake Temple continues.
“We recognize that dynamic and that’s why we’ve programmed GLOW, a really amazing light sculpture installation, at Gallivan,” Brewer said. “We’re promoting that as another touch-point downtown, another anchor between City Creek, Temple Square, Gallivan, Gateway and our downtown business. It’s just another reason to come downtown, walk around and have a great holiday experience.”
And there’s plenty more options for those who want to enhance their downtown shopping trip with a high-touch in-person experience, including six home games for the freshly christened Utah Hockey Club between Thanksgiving and Christmas, two home contests for the Utah Jazz, two Zach Bryan concerts at the Delta Center, a month of Ballet West performances of the Nutcracker at Capitol Theatre and a Mannheim Steamroller Christmas concert at the Eccles Performing Arts Center.
