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01/14/2022

Top Consumer Spending Trends in 2022

After a holiday shopping season rocked by another new COVID-19 variant, consumers and retailers are still making adjustments to their behaviors at the start of 2022.

The pandemic has drastically shifted consumer spending habits, driving shoppers online as some avoided in-person experiences to reduce exposure to the virus. However, as consumers become more confident (thanks to higher vaccination rates), spending habits are likely to change again in 2022.

Retail Leader caught up with Chelsea Wiater, portfolio manager at EFG-New Capital and expert in consumer finance, to learn more about the top consumer spending trends this year––and what retailers should take away from these behaviors.

Retail Leader (RL): How will consumer spending be defined in 2022?

Chelsea Wiater: Massive fiscal stimulus from governments around the world in 2020 and 2021 have resulted in consumers amassing a savings stockpile that is very likely to be unwound in 2022. With the vast majority of Americans fully vaccinated and as we get closer to reaching herd immunity, consumers are becoming increasingly more comfortable with navigating any new COVID variants that arise. Going into 2022, we can expect a more mobile customer base that will be willing to travel, consume and spend at heightened rates relative to the pre-pandemic environment.

RL: What are the top differences in 2022 spending compared to 2021?

Wiater: In 2022, consumers will shift their spending from goods to focus their spending more on experiences and activities that they weren’t able to participate in over the past two years of “social recession,” various lockdowns and restrictions. As we had seen in the post-2008 financial crisis, consumers spent the majority of their discretionary money on experiences rather than goods, as the rise of social media made shareable experiences extremely enticing. 

Unfortunately, amidst the pandemic, the majority of experiences were no longer safe, and as a result, goods dominated consumer spending. [This year] should hopefully bring about a more mobile population and have people prioritizing spending on experiences again rather than goods. 

RL: How are consumers thinking about/impacted by inflation pressures and supply chain disruptions?

Wiater: This past year, retailers have benefitted from a very minimal promotional environment, which is a result of both price inflation and supply chain disruptions. Due to this, Black Friday and Cyber Monday/week sales were significantly lower than prior years and reversed a pre-pandemic trend that seemed unbreakable until this year. 

This has created a dynamic whereby higher-than-usual prices and widespread out-of-stocks have jilted what might have otherwise been a very enthusiastic holiday shopper. Furthermore, amidst the time-sensitive shopping pressures that have come with the holidays, consumers are increasingly turning to gift cards — this also helps the consumer avoid inflation, rather, they are passing inflation on to the giftee to bear! 

RL: What should retailers know about 2022 spending to keep consumers returning to stores?

Wiater: Going into 2022, retailers need to adapt to increased convenience and frictionless shopping. Consumers now expect that their digital experience merges seamlessly with the experience they receive in store — this cohesive storytelling, branding, support and experience will be paramount for retailers post-COVID.