What will the Christmas business be like in 2022? Five forecasts
According to Salesforce's Shopping Index, inflation will have a striking impact on the upcoming holiday shopping season, with predictions of declining brand loyalty, declining online sales, sustained shopping awareness - but also rising interest in NFTs.
Inflation is causing problems for consumers. Effects on Christmas business are foreseeable. Salesforce assumesthat the modest growth in Christmas sales in 2021 could foreshadow this year. This trend is confirmed by data from the Salesforce Shopping Index: In the second quarter of 2022, they showed a six percent year-over-year decline in global digital sales. The Swiss Retail Federation has already in April Declining sales in online retail recorded.
In addition, prices have been rising since the beginning of 2021. Consumers worldwide have ordered 12 percent less online than in the same period in 2021, and this process has accelerated since spring 2022. Salesforce sees more competition between brands as consumers buy fewer items from fewer suppliers.
Luca Pastorino, Head of Sales at Salesforce Switzerland, says: "What is happening worldwide is also emerging in this country. Swiss retailers have always adapted to changing customer needs and technical challenges. Regarding omnichannel offerings, Swiss retailers are leading by example, but it's a difficult year for them as well under these circumstances and they need to rethink strategies."
Five forecasts for the Christmas business
Forecast 1: Christmas shopping starts earlier
Consumers will be shopping for their Christmas gifts earlier in 2022 to avoid price increases due to inflation and to ensure they receive gifts on time despite supply shortages. The Shopping index 42 percent more consumers worldwide are planning to buy gifts well before November. They hope to get their presents before prices rise too much.
Forecast 2: Achieving customer loyalty will become more difficult
In 2020 and 2021, customer loyalty shifted strongly toward convenience and security, as consumers wanted a frictionless shopping experience. Now, with inflation on the rise, customer loyalty is shifting again - this time toward value, or "What do I get for my money?" According to Surveys from Salesforce half of all consumers will switch brands this year due to rising prices. This means that 2.5 billion customers worldwide could abandon their brand in favor of a cheaper competitor. The customer experience, online and offline, is becoming critical to success.
Forecast 3: The retail store drives growth across all channels
Last year, brick-and-mortar retailers significantly influenced digital sales as store associates excelled in their roles as fulfillment experts, consultants, social influencers and digital stylists. In fact, brick-and-mortar retailers now influence 60 percent of digital orders. This year, with stores back in full operation, consumers are likely to flock to stores in even greater numbers. What matters most to them is the personal experience they missed during the pandemic. Companies that sell both bricks-and-mortar and online have the opportunity to grow faster than pure e-commerce providers. Merging digital and physical stores increases the value of each channel. Salesforce predicts that companies with brick-and-mortar stores will grow their online sales 1.5 times faster than those without.
Forecast 4: Consumers buy sustainably
In the last two years, trust in a company and environmentally friendly production have become more important. In its latest State of the Connected Customer Report Salesforce found that 88 percent of consumers expect brands and retailers to clearly state their values. 64 percent of respondents will turn away from a brand if the company's values do not align with their own.
This is especially true when it comes to the environment: after Surveys from Salesforce 83 percent of consumers worldwide will look for sustainable brands and products this year. In fact, a company's environmental practices are the most important factor in purchasing decisions after how it treats its customers and employees, with the importance of sustainability initiatives ahead of diversity and economic justice measures.
Forecast 5: Retailers will test NFT drops
Every holiday season, there are "it" gifts. This season's hot collectibles come straight from the metaverse: In fact, 46 percent of consumers in the survey said they were considering buying NFTs (Non Fungible Tokens) - digital assets that represent something unique or rare and are stored on a blockchain. This can be a virtual version of a real item or a digital collectible. Younger consumers in particular plan to purchase NFTs. Generation Z is four times more likely than Baby Boomers to buy a physical product this year if it is linked to a digital version.
NFT purchases are still in the exploratory phase. Salesforce expects about half a million NFTs to be purchased by retailers and manufacturers between November and December, with a potential total market value of $54 million.
Economic challenges and changing consumer preferences mean that a data-driven strategy will be critical to respond to ever-changing conditions in real time.