Fed up with mounting global crises, consumers are reaching for their credit cards to make up for missed pleasures with a hefty dose of retail therapy. For astute retailers, it's an opportunity to boost profits and nurture eager spenders looking for their next retail hit. In the weeks ahead, winning retailers will be those that are quick to respond to evolving buyer behaviors.
U.S. consumers are spending with a vengeance
After two years in crisis mode, shoppers don't want to miss out on a good thing, particularly as their needs change and supply chain hiccups threaten holiday festivities. By August of this year, spending for goods surpassed pre-pandemic levels with a 25.69% jump since January 2019.
That itch to spend is reflected in driving data captured by Waze: In October 2021, trips to department stores rose by 4% compared to September. Higher-income and younger consumers are driving that trend, reports McKinsey, with a spending growth of 11% and 15%, respectively, relative to pre-COVID spending.
Looking ahead, it's safe to surmise U.S. shoppers are just getting started: In a survey of nearly 8,000 consumers, 34% say they will increase their holiday spending this year by an average of 48%.
Homebody economy persists
While out-of-home activities have increased, consumers continue to spend to upgrade their home environment. As more Americans work and study from home, 33% have invested in a home office, home gym or home renovations.
Even so, they're not done with home upgrades: In the next 12 months, more U.S. consumers are planning big life decisions (e.g., buying a house, having children, moving to a new community) than before the pandemic. Big plans don't come cheap, and we can expect more spending to follow.
Shoppers want to buy local
As convenient as online shopping can be, there's nothing like holding a product in your hands, discovering a new treasure in person and supporting local businesses. This year, consumers are increasingly looking up nearby stores, with searches for "now near me" growing more than 200% year over year.
Altogether, 83% of holiday season sales are projected to happen in brick-and-mortar stores, with 60% of consumers planning to spend more at local small shops this year.
Safety concerns linger
While retail spending is thriving, we're not out of the woods from a safety perspective. This holiday season, 53% of consumers have safety concerns about shopping in-store, though 55% say mask usage and frequent sterilization makes them more comfortable. Curbside pickup and click-and-collect also add to a sense of safety for 52% of consumers.
One way retailers can alleviate safety concerns and make their offerings known is to add a curbside pickup badge on the Waze platform. Put simply, this badge enables Waze users to spot stores on their driving route that offer curbside pickup. Waze data shows a direct correlation between this ad format and increased trips to those retailer locations.
A rare opportunity
Brand loyalties remain fragile as consumers break out of old patterns and try something new. In the past two years, 39% of consumers have changed brands or retailers and 79% of those intend to continue exploring their options.
This is good and bad news: While retailers can't take long-time customers for granted, conditions are ideal for attracting new ones — an unusual second chance to make a first impression. To that end, researchers advise retailers to revise their advertising, messaging and positioning to match new buying behaviors. Instead of consumers adapting to brands, it's time for brands to adapt to consumers, meeting consumers where they are.
Swaying on-the-go consumers
Speaking of meeting consumers where they are: Increasingly, shopping decisions are made in the car. "On-the-go consumers in their cars represent a critical — and largely untapped — context for advertising, where targeted messages influence buyer behavior at the moment they are most likely to act," notes Forrester Research in a study commissioned by Waze. Waze data bears this out, with 160 million active users interacting with the navigation app each month, driving an 18% increase in trips to retail locations that appear on the Waze map.
"Advertising on Waze allows retailers to reach consumers at critical decision-making moments, when they're nearby or navigating to businesses like theirs," says Liz Franz, Head of Industry, CPG & Retail at Waze. "Each year, Waze drives more than one billion trips to retail locations. Being able to link those visits to digital impressions on our platform and demonstrate the incrementally of their investment is why retailers see us as an important part of their marketing strategy," she explains.
Want to lead more shoppers to the checkout counter? Cater to new expectations, stay visible in decision-making moments and unify physical and digital experiences.