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2022 holiday retail recap: Unwrapping the results of the season

Recapping the 2022 holiday shopping season

In the face of economic uncertainty and ongoing operational challenges for retailers and consumer product companies, the 2022 shopping season reflected cautious consumer spending, continued growth of digital channels, and a return to pre-pandemic norms, such as in-store shopping and the resurgence of Black Friday.

Published January 2023

Predictions and Overall Results

Consumers and retailers alike entered the holiday season amid unique economic and social circumstances with concerns of a potential economic downturn and rising prices.

While Deloitte forecasted an annual total sales increase of 4% to 6% year over year (YoY) and an e-commerce increase of 12.8% to 14.3% YoY during the holiday season, the observed growth ranged from 5.3% to 7.6% for total sales and from 3.5% to 10.6% for e-commerce. The 2022 YoY holiday growth rate slightly surpassed analysts' projections. However, it is important to note that the annual inflation rate during the 2022 holiday season was as high as 6.5% (note: the average annual inflation over the prior five years was only 2.9%), which largely offset the reported revenue growth.

The 2022 holiday shopping season was shaped by inflation and digital spending, showcased by cautious spending behaviors—like spreading out expenses and shopping around for discounts—as consumers watched their buying power shrink. This quick take examines several trends that affected how consumers, retailers, and infrastructure providers performed during the 2022 holiday retail season.

Return of in-store shopping and desire for omnichannel experiences

* In-store represents credit/debit card purchases made in a physical store swiped at a POS system, while online represents credit/debit card purchases made online via web/mobile/app.

This holiday season, customers returned to stores for both in-person shopping and pickup of online orders. Although the role of stores has evolved since the pandemic, they proved to be as important as ever—71% of customers shopped in physical stores as often or even more often than before the pandemic, and overall spend in stores increased 6.8% compared to 2021. This year, in-store spend accounted for 66% of total holiday sales in 2022, up slightly from 65% in 2021 and 64% in 2020.1

As omnichannel shopping continued to influence the retail landscape, “buy online, pick up in store” (BOPIS) services became increasingly popular around the holidays. This season, nearly one of five orders were placed using BOPIS. While BOPIS usage saw unprecedented spikes when the pandemic hit in 2020, its steady usage increase YoY indicates that customers enjoy this convenience.

Earlier shopping, higher discounts, and excess inventory

Though Cyber Weekend2 is traditionally the start of the holiday shopping season, over half of US consumers this year began their holiday shopping before Thanksgiving. The phenomenon was likely due to pre-Black Friday deals, such as early access sales in mid-October, as well as early savings deals for loyalty members. As a result, this season’s retailer loyalty programs became more important than ever, and discounts were the most sought-after program benefit.

With an earlier start to what proved to be a longer shopping season, Cyber Weekend became the halfway point to the holiday shopping period. Less than half of US consumers completed their holiday shopping prior to December, leaving plenty of room for additional purchases, with the majority looking for more holiday deals. Sixty percent of consumers surveyed ahead of the season cited that discounts or sales would be a main driver in deciding where to shop. Many retailers reacted by offering steeper discounts this year, especially on Cyber Monday, with toys discounted at 34% and electronics discounted at 25%, on average. Several retailers even offered post-holiday deals in a last-ditch effort to lift sales and clear excess inventory, extending this year’s holiday season.

Social platforms provided gift inspiration

One of the top social media sites, most well-known for creating and sharing videos, asserted its growing popularity and influence once again this holiday season. While consumers still primarily headed to established social media platforms for gift inspiration, the new application was able to attract consumers, with 67% of users seeking out the platform for gifting inspiration. Platform users were 1.4x more likely to purchase something seen on the application than on any other social media this holiday.

However, the brand’s user and engagement metrics prevented it from completely surpassing established social media sites this holiday season. From September to December 2022, with a monthly active user count of ~35 million, the social media platform lagged its biggest competitor by 50–75 million users.Should the application’s monthly active user count grow to that of its counterparts and avoid impending government regulatory action, it could be even more influential next holiday season.

Shifts in spending categories

By category, discount, club, grocery, and mass retailers saw increased growth in spend this holiday season as consumers shifted spend away from specialty retailers, such as those in home and electronics. This trend continued from last year as the spend rebalanced from the “COVID winners,” home improvement, grocery delivery, and home categories. The decline in spend at specialty retailers, including last year’s big winners, department and footwear and apparel, represents the shift from discretionary to non-discretionary spending as consumers’ purse strings tightened with inflation.

Holiday in the metaverse

The metaverse provided retailers with unique opportunities to engage with tech-savvy shoppers this holiday season; however, its long-term value remains unclear. Major players adopted virtual reality to innovate how they research, market, and sell to their customers. One multinational fast fashion retailer created a new revenue stream selling holiday accessories and apparel, like winter beanies and hoodies, using virtual currency in the metaverse world. A luxury department chain built a virtual holiday store for its premium retail brands to display new products, integrated with unique virtual experiences (e.g., displaying outdoor winter products in a virtual ski chalet). Lastly, this mega retailer took its famous Thanksgiving Day parade into the metaverse with the virtual parade, including non-fungible token galleries where visitors could vote on their favorite designs to become a parade float next year!

Retailers disincentivized returns

Retailers changed infrastructure and altered existing policies to disincentivize returns this holiday. In 2021, the return rate climbed to ~16.6% of total US retail sales, and consumers were predicted to return over $1.4 billion in holiday purchases this year, a 57% jump YoY. To avoid the holiday return frenzy, retailers condensed return windows and charged return fees. Several notable apparel retailers shortened their existing return policies to be within a month of the purchase date. Other retailers opted to charge customers shipping and processing fees for returns by mail. Sixty percent of retailers adjusted their existing policies, signaling that the operational and financial headache of returns aren’t always worth the customer flexibility.

Buy now, pay later gained popularity with holiday shoppers

Amid heightened inflation and high holiday spending, consumers sought to stretch their dollars further this holiday season with buy now, pay later (BNPL) services: short-term financing parsing purchases into smaller no-/low-interest payments. Heading into the holiday season, 72% of shoppers were worried about the rising costs of gifts, and almost a quarter of consumers were worried about their inability to pay off this debt.

BNPL services offered consumers flexibility with alternative financing and the ability to increase spend this holiday season. BNPL services saw a 17% increase YoY in monthly page visits from October to December,1 and more than a third of Cyber Weekend shoppers indicated they would use BNPL to finance their holiday shopping. Financing purchases via credit, loans, or BNPL on Black Friday was most popular with millennial and Gen Z consumers along with those struggling to pay their bills.

Seasonal hiring and corporate layoffs

Despite last year’s labor shortage, many retailers hired fewer seasonal employees this year. During November, the retail industry experienced a low that hasn’t been seen since 2008, with only ~256,700 retail seasonal jobs added to combat the holiday rush, down 26% YoY. This decline came as little surprise, as a major retailer announced they were hiring only 40,000 seasonal employees after hiring 150,000 in 2021. Large retailers also conducted major corporate layoffs to manage costs, leaving many consumers unemployed during one of the most popular spending periods of the year.

That’s a wrap on the holiday

While inflation remained elevated, consumers found ways to stretch their wallets, and retailers offered steeper discounts to attract price-sensitive shoppers and clear out excess inventory. While holiday spend increased compared to last year, when accounting for inflation, we see that retail sales growth remained relatively flat YoY.

Click here to download the full report for further analysis.

Special thanks to Meghan Cole, Kate Christian, Kristopher Harvey, Alexandra Heckel, Alyssa Casale, Christian Sottosanti, Carly Cabral, Kenzie Fowler, and Emily Malech for their authorship, support, and research throughout the development of this article.

1Affinity Solutions, Inc. – Deloitte InSightIQ Analysis
Cyber Weekend includes the five days between Thanksgiving Thursday and Cyber Monday.

Affinity Solutions, Inc. – Deloitte InSightIQ Analysis

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