Fewer than one in five (17%) consumers feel optimistic about their financial situation going into the festive season, according to Accenture’s latest shopping survey.
When thinking about their finances ahead of the holiday season, six in 10 consumers are already — or are planning to — cut back on giving gifts to close family and friends due to budget constraints, rising to 69% for extended family and friends. Just over half (52%) of consumers have already agreed — or are planning to agree — not exchange gifts with other adults.
Accenture Australia and New Zealand retail lead, Tom Priestley believes the survey findings show the dynamic nature of the current retail environment with some consumer segments and categories under real stress.
“In a bid to preserve margins, we’ve seen store closures, lease renegotiations and price increases across the board – and in many cases, it’s the consumers who are bearing the brunt of these cost-saving tactics,” he told Retailbiz.
“Brands simply cannot afford to continually offer the customers less for more; they’re harming their long-term health, growth and viability. With individuals increasingly mindful of their outgoings, we are seeing a collective shift in consumer spending patterns, and retailers need to be prepared to adapt their offerings.
“Agility here is key as consumers become more selective, value-conscious and responsive to promotions. Thanks to emerging technologies, like Generative AI, delivering this is possible and the brands forging ahead are the ones who have placed this at the heart of their strategies.”
Given market conditions and evolving consumer trends, Accenture expects consumers to act with more caution this holiday season as they search for creative, yet practical ways to stretch their budget.
“This can be seen in a reduced spend on Christmas/festive decorations to save on utility bills or cooking at home more and making cost-conscious meals. Consumers are likely to prioritise essentials and value-conscious choices, actively seeking discounts and favouring brands that offer personalised and engaging loyalty programs,” he said.
As for Priestley’s advice for retailers – focus on execution. “Understand your customers, support your team members, tune your front end and sweat your supply chain.”
He added: “In times of high-pressure, snap decisions like lowering costs and upping promotions to boost competitiveness can see more immediate returns. But the long-term risk of this means a bigger sacrifice to margins. The most successful retailers are the ones who focus on consumer data and use this to precisely target their marketing campaigns and promotions for ultimate impact.
“Remaining vigilant with regard to the competitive landscape and staying attuned to changing consumer trends is vital for retaining a competitive edge. This means many may need to revisit their traditional strategies and opt for a more nuanced, data-driven approach that truly understands their customer. No matter the time of year, investing in technology-enabled agility is an imperative for sustained success in the retail sector.”