Six Key Takeaways for Retailers to Drive Holiday Success
Consumer sentiment has risen slightly in the last few months, though it remains at historically low levels. The Consumer Sentiment index hit a historic low of 50.0 in June 2022. The index has risen slightly to reach 59.81 in October, but consumer sentiment has not been this downbeat since November 2008 when it registered 55.3. The Expectations Index declined over 3% in October as consumers wrestle with continued uncertainty over inflation as we head into the holidays. And while the rate of inflation has slowed a bit of late, the U.S. savings rate is down, revolving credit levels are up, and shoppers are challenged to manage the cost of basic goods, housing costs, and fuel prices.
Against this backdrop, Ankura's Performance Improvement team conducted a survey2 among U.S. consumers to understand how they are feeling about the U.S. economy and their personal financial situation and how they plan to shop and – critically – spend for the holidays in 2022. Based on the survey feedback, holiday sales could show slight improvement compared to 2021. Retailers will have to work strategically to earn shoppers' patronage during what promises to be a competitive battle for their share of the wallet.
Source
- The Surveys of Consumers, conducted by the Survey Research Center at the University of Michigan https://data.sca.isr.umich.edu/survey-info.php)
- Ankura consumer survey, U.S. sample of 1,042 respondents aged eighteen and above (October 3, 2022)
ECONOMIC SENTIMENT
U.S. Economy
It comes as no surprise that U.S. consumers are anxious about the economy, and our survey confirms the depth of their concerns. Just 16% of respondents said they feel good or great about the U.S. economy right now, with 59% saying they feel not good or bad. Further, 68% said they felt the U.S. economy had gotten worse over the last 12 months.
Survey results show a guarded to negative consumer outlook for the U.S. economy. Overall, just 30% expect to see improvement in the U.S. economy over the next 12 months. Interestingly, among Gen Z consumers (age 18-25), the 12-month outlook is slightly more optimistic. Forty-three percent of Gen Z respondents see the U.S. economy improving, compared to just 27% for the rest of the population.
Personal Financial Situation
Concerns about the U.S. economy translate directly to consumers' outlook on their personal financial situation. When asked how concerned they are now about their family's economic situation,
74% said they are at least mildly concerned, and almost 25% are "very concerned."
Do consumers see improvement coming in the immediate future? In short, no! Just 13% said they expect the U.S. economy to improve in the next 12 months, and over half (52%) feel it will be 18 months or more before they see a "good" U.S. economy. With the current level of angst among shoppers, what should we expect when it comes to their plans for holiday?
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