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How Holiday Shopping Will Be Different This Year

Supply chain issues aren’t the only changes this shopping season

Posted in: Faculty Voices, Homepage News

Holiday gatherings will look different from last year, with many families vaccinated and travel restrictions loosened – but what’s under the tree may also be a departure from years past.

Social media trends, new payment options and global supply chain issues will make for an unprecedented holiday shopping experience. Here, four Montclair State consumer and economy experts share predictions and observations about the most wonderful time of the year.

‘TikTok Made Me Buy It’

Some Trader Joe’s locations have an “As Seen on TikTok” shelf of popular items. Visit your local Barnes & Noble and you may see new recommendations under a sign that reads “#BookTok.” And if you’re driving from Ulta to Ulta trying to track down that mascara your niece has on her wish list, forget it – it’s sold out, thanks to the all-knowing algorithm and viral trends that have users flocking to brick-and-mortar stores and online retailers.

Manveer Mann, associate professor of Marketing, says that consumer shopping habits have certainly evolved as a result of social media, algorithms and influencer culture.

“Many studies have shown that social media plays a significant role in driving purchase decisions,” Mann says, citing research that has identified two key variables that impact purchase intention: social influence of peers and the quality of information available. In today’s world, the latter could reference the power of the almighty, all-knowing influencer.

“Content creators have been playing a growing role in shaping ‘what is cool,’” Mann says. “It serves as a two-way communication channel that can disseminate information much more effectively than the traditional forms of marketing communication.”

Patrali Chatterjee, professor of Marketing, adds that TikTok is perhaps the most powerful social platform in driving shopping trends and behavior. “It is completely video-based, which is more engaging than other formats.”

What viewers are exposed to is decided by the algorithm, she explains. “It relies totally on the user’s location, their actions on the videos and how long they watch to uncover their preferences and interests in that instant.”

Because the user is passively scrolling and their attention is completely immersed in the video on the screen, the defenses of cynicism or counter-arguing are low, making it easier to believe claims in the video. “If they are enjoying the experience, they will not want to leave the app to check reviews or comparison shop,” Chatterjee says.

So if you want to guess what you should be gifting your internet-savvy relatives and loved ones for the holidays, just browse the “TikTok Made Me Buy It” tags.

The year of ‘Buy Now, Pay Later’

Trying hard to stick to a budget but still eyeing that big-ticket item? Several “Buy Now, Pay Later” (BNPL) services including Afterpay, Klarna and Affirm have joined traditional payment options on online retailer sites, and we will likely see them grow in popularity, according to Archana Kumar, associate professor of Marketing.

Most work like this: As customers check out and select one of these platforms, their order totals are broken down into four equal payment installments, the first of which is charged at the time of purchase; installments of the remaining balance are charged automatically every two weeks thereafter. The majority of these new platforms have transparent terms, do not charge interest or run credit checks – all appealing to consumers, Kumar says, especially since they can pay off their “debt” in just a few installments.

Retailers benefit too, Kumar says. “Payment plans generally encourage consumers to purchase more or purchase a high-price product that they would not have otherwise.” Kumar points to other pluses for retailers, including a decrease in shopping cart abandonment and fewer returns of items purchased via BNPL.

But Kumar warns shoppers to note the drawbacks of such services. “These options could lead to overspending, [consumers] could fall behind on payment,” she says. “And once consumers get used to shopping with these payment installments, interest fees may be introduced in the future.”

More supply chain issues

Stories about supply bottlenecks and “parked” cargo ships have made countless headlines, many of them warning the masses to start holiday shopping much earlier than usual to avoid delays or low inventory. Luis Portes, professor of Economics, agrees these challenges will have an impact on the biggest shopping season – but not exactly in the way we might expect.

“For those in retail, Christmas orders are placed at the latest by June, so that they are in stock by late October,” Portes says.

That means there’s a chance the gift you want will be in stock. However, Portes says, supply chain disruptions and high freight costs are ongoing, and because of that, goods may be more expensive (more so if some retailers do end up experiencing a shortage in supply).

“The news about inflation and worries about higher prices for holiday shopping are likely to come true and extend until the circuits of global trade and shortages in specific sectors get unclogged and resolved,” he says.

Of course, there’s always a Plan B if the recipient’s wishlist items are not in stock, sold out because of TikTok, or were too expensive (even with a payment plan). Portes says we may see many opt to go the DIY route in terms of gift giving, or offer other nontraditional gifts such as “experiences” – tickets to a show, a gift certificate to a local restaurant or more. The latter is a trend that started before the pandemic and may continue to grow, Mann says, as more consumers choose to spend their money on experiences over products.

To interview our economy and consumer experts, please contact the Media Relations team.