Will travel keep retail’s 2022 holiday from taking off?

Discussion
Photo: Getty Images/ferrantraite
Nov 08, 2022

This holiday season, customers might be more likely to head to an airport than a shopping mall. Thanks to an increased customer interest in traveling, some worry that retailers might find themselves with less foot traffic than they had hoped for.

Travel spending has been skyrocketing recently thanks in part to flexible office schedules making international travel more feasible for U.S. workers and extending it beyond the usual travel season, according to CNBC.

People are also traveling despite the increasing cost of plane tickets. The willingness to pay more may come down to pent up pandemic travel demand, along with the fact that travel plans for the holiday may have been made earlier in the year before some cost increases hit. Fears of a possible recession may also be encouraging consumers to take expensive trips, with people seeing it as their last chance to splurge on a vacation.

At the same time, credit card debt is already at a 20 year high and experts are anticipating much lower holiday spending than that seen in the past two years. The National Retail Federation contends that those spending on vacation will also spend on retail purchases like food, gifts and clothing.

While the travel data is not broken out by age group, the trend is in keeping with longstanding reports that Millennials are more likely to spend on experiences than products.

Retailers have other concerns as well going into yet another difficult-to-predict holiday season.

Year-long supply chain disruptions and the emergence of the omicron strain of the novel coronavirus during the 2021 holiday season prompted retailers to pack away inventory to the tune of $548.8 billion. Now as Christmas 2022 approaches, retailers have begun putting that product out on the shelves at a deep discount. This means retailers potentially making lower margins during the holiday or being stocked with outdated products.

Consumer confidence is also eroding in the U.S. as the holiday season draws closer, according to Forbes. Lynn Franco, senior director of economic indicators at The Conference Board said that consumer confidence receded last month, after having been on the way back up throughout August and September.

DISCUSSION QUESTIONS: Do you expect retailers to take a hit this holiday season because of money being rerouted to travel? Should retailers try to capitalize on travel-focused customers and, if so, how?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"It’s not for nothing that the cities with the most successful malls are tourist destinations. People will do both."
"Let’s be honest, it is not going to be an easy and great holiday trading season for most retailers."
"The experience alternative has been growing for years. I see nothing in retail stores to slow it down."

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18 Comments on "Will travel keep retail’s 2022 holiday from taking off?"


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Bob Phibbs
BrainTrust

Retail is going to have a fabulous holiday. Please stop with the fear. People who travel are opening their wallets which leads to more eating and shopping.

Jeff Sward
BrainTrust

Rising consumer debt and inflation were already going to dampen holiday spending. If travel is going to then take a bigger-than-usual share of wallet, then it sounds like mall and e-commerce retailers need to be concerned. Especially if they own too much inventory.

Gene Detroyer
BrainTrust

I am sure travel will hit the holiday budget. But let’s add experiences to that alternative. The experience alternative has been growing for years. I see nothing in retail stores to slow it down. The demographics will certainly favor that trend.

With credit cards already topping out more exciting gifts than that traditional sweater, the retailer will not be at the top of the spending list. Will travel or experiences give a family more bang for the buck and more excitement? Let’s not forget the perceived impact of inflation. UGH!

Last holiday season, half of my family’s holiday spending went to experiences for the family. I imagine we will do the same this season.

Neil Saunders
BrainTrust

During the depths of the pandemic a lot of non-retail spend on travel, entertaining and so forth, was diverted to spending on products. This is now shifting back and retail faces more competition for the consumer dollar. This will inevitably make growth much harder. That said, I don’t think any of this will be a disaster for retail this holiday season, it just makes things a little more challenging. It also underlines why pulling out all the stops to give customers an experience and product they want is vital.

Andrew Blatherwick
BrainTrust

Let’s be honest, it is not going to be an easy and great holiday trading season for most retailers. All economic indicators show that people are having to tighten their belts and there is a lot of concern and worry. But Christmas often sees people splurge when they are feeling uncertain and worried. At the very least many retailers will clear the stocks they had from last Christmas. While we all worry about it being old stock the consumer is not close enough to really see that. Travel is probably the least of our worries, it just adds another dimension to the problems we are already facing.

Georganne Bender
BrainTrust

Have you ever traveled during the holidays? It’s insane. Just the thought of Disney during Christmas break makes me dizzy.

It almost sounds like retailers are already looking for excuses as to why Holiday 2022 sales weren’t up to par. We’ve already listed COVID-19, too much merchandise, not enough merchandise, and shortage of staff. Next up: winter weather.

Gene Detroyer
BrainTrust

Let’s trade Disney for white sandy beaches.

Georganne Bender
BrainTrust

Travel anywhere is a mess at Christmas!

Craig Sundstrom
Guest

Or winter warmth! Wasn’t that always the excuse why coats didn’t sell?

Paula Rosenblum
BrainTrust

It’s not for nothing that the cities with the most successful malls are tourist destinations. People will do both.

Why? Retailers will be running big sales.

Dick Seesel
BrainTrust

Spending money on experiences vs. “things” is not a new trend, but it’s underlined by post-pandemic changes in consumer behavior. That being said, spending of discretionary dollars on anything — travel, dining out, and so forth — is actually a good harbinger for retail business. There are real economic pressures like inflation, but shoppers will be spending despite the perception that “everything is awful.”

Nicola Kinsella
BrainTrust

While some will spend less, in a recent holiday shopper survey we conducted, 27 percent of U.S. consumers responded that they planned to spend more than they did last holiday season, with 12 percent planning to spend much more. There is still a lot of pent up demand, but it will probably shift away from those categories popular during the pandemic (think leisurewear and home goods) to other items (like “going out” clothes and travel inspired purchases like luggage and resort wear).

Scott Norris
Guest

My wife’s brother died because of COVID-19 and her parents died of other causes during the pandemic. So none of them will be buying presents for our daughter this year. And we can’t stand the thought of an empty house at Christmas. So we’re getting out of town to try to build new traditions.

Georganne Bender
BrainTrust

That’s so sad, Scott. I wish you Godspeed in your travels.

Al McClain
Staff

Really sorry to hear, Scott. I hope your travels bring some joy to your holidays.

Patricia Vekich Waldron
Staff

Those that can afford expensive trips will also be able to spend on holiday gifts. Those that do not have the resources are likely to pare back or trade down on holiday spending.

MattFurneaux
Guest

Pent-up demand for travel this holiday season, whether for family visits or pure leisure, is still delivering strong results from airlines here in Europe, particularly the low-cost carriers such as EasyJet and Ryanair. Inevitably that demand will normalize in time, but spend is spend, whether it’s on goods, gifts or experiences and is driven by upstream consumer confidence and economic spending power. As mentioned elsewhere, the power of “vacation money” on trips is likely to lead to higher levels of discretionary spending in stores and dining establishment while away from home. We see in research that we’ve recently carried out that consumers are mindful of retail inflation and the high cost of living, but are still in that “post-COVID-19” mindset of wanting to kickstart their lives again.

Craig Sundstrom
Guest

This is an … interesting question; ultimately, of course the answer is “yes”: a household only has X dollars and every dollar spent on one activity is one less for another; or for saving: for a long time we had both guns AND butter by generous borrowing (leading inevitably to the question “are we overextended?”). But I suspect what Matt means is “will the substitution be so pronounced that retailers will have ‘disappointing’ sales?”

I don’t think so: travel, particularly international travel, is a small part of the economy, and I’m a little skeptical of vague terms like “skyrocketing” (how much more dramatic than saying up 8.3%, or such). Retail may face a lot of headwinds this year, but I think travel will be far down on the list of villains (the possible exception being, ironically, lack of travel: the still-awaited return of international tourists has hit some cites hard).

wpDiscuz
Braintrust
"It’s not for nothing that the cities with the most successful malls are tourist destinations. People will do both."
"Let’s be honest, it is not going to be an easy and great holiday trading season for most retailers."
"The experience alternative has been growing for years. I see nothing in retail stores to slow it down."

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