Holidays clouded in doubt due to inflation's impact

Consumer confidence has surged to its highest level since April, thanks to lower fuel prices. However, the holiday season of 2022 is shaping up to be a challenging one for both consumers and retailers, as inflation and lingering supply chain issues pose significant hurdles.

According to a survey by Creatopy, a third of consumers plan to start their holiday shopping a month early, with another 20% starting two months ahead. This early shopping trend is a response to inflation, which is affecting the holiday shopping decisions of 40% of consumers.

Inflation has created a choosy, less loyal consumer base that is keen on finding deals during the holiday season. Unsurprisingly, 41% of shoppers are looking for coupons, discounts, and sales. Additionally, 21% of shoppers will opt for cheaper brands to save money.

The financial cushion that many consumers enjoyed last year is gone, and they are grappling with months of budget-busting price increases on essentials. The latest credit card debt statistics indicate that the average U.S. consumer's financial situation has the potential to get much worse before getting better. Most households carry some credit card debt, with 43% holding more than $5,000 and 21% more than $10,000.

Half of the holiday consumers surveyed are either "somewhat worried" or "very worried" about how inflation will impact their shopping plans. Some 40% of shoppers plan to buy fewer things, while about 7% will turn to payment options like cash advances and buy now, pay later to finance their holiday purchases.

Retailers may eke out a decent holiday season if they can meet the needs of a beleaguered consumer. Large majorities of consumers are choosing where to shop based on free shipping (67%), deals or promotions (66%), and value for the price (58%).

Amazon and Target have scheduled holiday sales and gift guides for early October to help early shoppers. Some 46% said they plan to start holiday shopping before Halloween, though that's down 7 percentage points from last year, according to research from AlixPartners.

Last year, a new COVID-19 variant kept some consumers from gathering and shopping in stores, but holiday sales were robust due to government financial support. This year, uncertainty is back for the holidays due to higher costs for consumers and retailers.

Despite these challenges, it seems that consumers are determined to make the most of the holiday season. They are starting their shopping early, being choosy about where they spend their money, and looking for deals and discounts to stretch their budgets. Retailers who can meet these needs may find themselves with a successful holiday season, even in these uncertain times.