2023 Holiday Shopping Trends

The convergence of economic uncertainties, societal tensions, and changing shopping behaviors has sparked a unique holiday outlook for 2023. Brands now find themselves navigating terrain where authenticity, savvy spending, and empathetic connections play pivotal roles in shaping consumer interactions and preferences. 

One of the great things about advertising, especially digital advertising, is the relative ease to pivot investment towards the best performers at any particular moment. The holidays may be just around the corner, but it isn’t too late to look for last-minute opportunities for clients. And of course, shopping continues well after the season, so marketers must also prepare to promote brands in the new year as well. 

4A’s EVP Media, Tech and Data, Ashwini Karandikar says “While advertisers must be mindful of the challenges consumers face and the factors affecting their purchase decisions, holidays provide a wonderful opportunity to enhance brand experiences with both existing and new audiences.”  

We asked Lara O’Shea, Chief Strategy Officer and Julia Stern, Associate Strategy Director at Hudson Rouge, for their thoughts as we hit the holiday season. Here they explore the macro trends influencing consumer behavior and offers strategies for advertisers to not only thrive but also foster genuine connections in this dynamic environment.

Much like a Thanksgiving dinner that brings out deep-seeded family tensions, the high-stakes demands of the holiday season can exacerbate and magnify existing stressors in culture. But after a tumultuous few years, consumers have adapted, and the way they are approaching the holidays has changed. This means that while many are willing to spend on high-end items, brands will have to adapt to their new methods. Luxury brands not only have the opportunity to anticipate their needs, but also help them navigate future uncertainty.

How macro trends are impacting the holidays

Inflation has shoppers questioning their priorities

The stress of inflation has impacted consumers of every income level. While some have traded in conspicuous consumption for quiet luxury – discreet, high-priced items that only those in the know would spot – others have become critical of the materialistic nature of the holidays as a whole. According to a recent report, 75% of Americans and 60% of non-religious Americans agree that the nation has forgotten the real meaning of Christmas. 90% of people would like the festive season to be less materialistic, and 87% think it should be more about family and caring for others.

A harsher social climate calls for more genuine connections

Meaningful and genuine connections would be a welcome relief from the increasing division and lack of civility in culture. A combination of polarization and isolation means that not only are people lonelier, they’re also meaner (see: behavior at any airport). This attitude shift could mean a dip in holiday cheer and gift giving, or just more bullishness on deals.

How the 2023 holiday season will look different

Shoppers are back and ready to spend

The 2022 holiday season was marked by financial anxiety brought on by sudden inflation: 40% of Americans reported feeling pressured or worried by the approaching holiday season, while 32% of Gen Zers said they would likely skip Thanksgiving entirely to save money. In contrast, consumers now feel prepared and even eager to take on the 2023 holiday season, having learned over the past year. According to a survey from Optimove, 65% of people stated that they felt more confident in the budgets they had set for the 2023 holiday season. 40% of Americans intend to splurge – rising to 62% among Gen Zers and 51% among Yers. This outlook bodes well for the luxury market – both in terms of current luxury shoppers engaging and new consumers dipping their toes into the category.

Consumers now know where and when to save for the holidays

Part of this eagerness to spend comes from a savviness gained over months of living with inflation, with consumers learning the best times and places to shop to maximize savings. When it comes to timing, the earlier the better: 44% of Americans believe it’s better to buy gifts sooner to avoid potentially higher prices later in the year. 50% of shoppers said that they’ll start shopping by the end of October. When it comes to where they shop, consumers will still be visiting stores, but also turning to social media: the share of shoppers who buy on social media has nearly quadrupled in only two years. Another key tool will be loyalty programs: 78% of US shoppers say they’re interested in joining membership-based, premium loyalty programs that help them save, while most shoppers already belong to 3.4 loyalty programs on average. Brands have the opportunity to not only offer loyalty programs, but also create exclusive opportunities to save big and win brand love that will carry over into the new year.

Travel is back on the menu

According to Canvas8, past holidays can help us predict travel trends for the winter: “While the cost of living has indeed had severe impacts on daily life, Americans have shown a willingness to spend on significant events – for example…Memorial Day in 2023 saw Americans have a yearning and intention to travel. With expenditures to increase and occur earlier in the year, there are opportunities for brands to demonstrate an understanding of the societal pressures people face in the lead-up to such occasions.”

Returns remix the shopping cycle

With the ease and ubiquity of online shopping has come a boom in returns. According to a recent article in The New Yorker, the annual retail value of returned goods in the U.S. is said to be approaching a trillion dollars. Returns to online retailers now average close to 20%, and returns of apparel are often double that. Most (88%) retailers are responding by making their return policies stricter ahead of the holidays, but according to Salesforce, this is a risky move. Retailers with return windows of 30 days or less will see 7% fewer online sales in October and November. In addition, return policies that aren’t clear, easy, or reasonable will put 21% of orders at risk this holiday season. Winning brands will not only recognize the benefits of a flexible return policy, but capitalize on the extended shopping timeline that comes with returns and exchanges.

AI: The new shopping assistant

According to Insider Intelligence, generative AI and social media will have a major impact on shopper purchases this holiday season: 61% of emerging tech shoppers are already planning on using AI for gift recommendations. 17% of shoppers report they’ve already used generative AI for purchase inspiration, which includes researching products and getting recommendations. For brands, personalized customer service, marketing promotions, and commerce experiences powered by AI will drive $194 billion of that spending.

How to help shoppers navigate lingering uncertainty

While shoppers have newfound confidence and tools leading up to the holidays, there are still looming stressors to grapple with. Brands have the opportunity to help, both practically and emotionally, to relieve anxiety and gain brand love in the process.

Meeting shoppers where they are

One of the simplest ways to earn brand love is also the most discrete. Easy and seamless experiences remove barriers and help shoppers connect with your brand in the quickest and most natural way possible. According to Salesforce, shoppers expect retailers to meet them where they regularly engage, including social media, messaging apps, and live streaming services. This is known as “shopping at the edge,” where shoppers start – and increasingly complete – a buying journey outside of a retailer’s physical and digital space. Today, this journey often starts on social media, where 50% of shoppers say they discover new products.

Clarity and transparency

Honesty is always the best policy, and the same holds true for marketing. Today’s shoppers appreciate a peak behind the curtain to not only understand the motivations behind how a brand operates but also to feel like they have a hand in the process. Nowhere is this more true than in the luxury space, where high prices or limited quantities may raise eyebrows or cause frustration.

Empowerment and acceptance

Similar to giving shoppers an insider perspective on your brand, offering them a sense of control will be a welcome relief amid chaotic times. This could apply to products, offering inclusive sizes and formats – or services, providing different payment plans or experiences based on their needs. Loyalty programs are an easy way to give structure and much appreciated benefits.

Lead with empathy

From an emotional standpoint, brands can benefit from empathizing with their audiences – keeping a pulse on their stressors and understanding the realities of their day to day, while developing tools and messaging to address them. Leading with understanding is an easy way to shed the aloof or out-of-touch reputation many luxury brands carry.

Stay positive

While brands should avoid being tone deaf, often an optimistic or even funny tone can be a welcome relief from gloom-and-doom messaging shoppers are getting from the news and other brands, and could help be a positive differentiator for your brand.

Try nostalgia

If the pandemic has taught us anything, it’s that when times are tough, we take comfort in familiar artifacts from simpler times. This approach can also highlight how your brand has been a resource over time, while also looking to a brighter future.

While consumers have gained shopping prowess and an optimistic outlook leading up to this holiday season, they still face an uncertain market and a dour news cycle. Brands have the opportunity to not just capitilize on their desire to spend, but to lean into their newfound skills and provide some much needed positivity in culture. With its high barrier to entry, the luxury category stands to win especially big. While tactics like social media marketing, loyalty pricing, and empathy were once foreign concepts for this space, they’re now some of the best tools to earn loyal fans and attract new ones this holiday season.