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How  Will  the US Trade War Affect Holiday Shopping?

How Will the US Trade War Affect Holiday Shopping?

In a new study, 46% of participants stated that they plan to spend “significantly” or “slightly” less this year on holiday shopping.

In an effort to determine how the trade war, and in particular how price increases, will impact spending habits approaching the holiday seas, JDA software surveyed over 1,000 U.S. consumers.

The survey uncovered the following five consumer perceptions and forward-looking plans in response to the ongoing tariffs:

  1. Most consumers are only “somewhat familiar” with the trade war news: Nearly 85% of respondents are familiar with the news around the U.S. trade war/tariffs with China, but only 28% reported regularly following the news, while 57% only have a general understanding of what’s going on.
  1. Recent spending habits remain unaffected: An overwhelming majority of consumers report their recent spending is “business as usual” in light of the trade war with China. Of those familiar with the news, 65% of respondents stated it’s had “no impact” on their recent spending habits.
  1. Consumers plan to spend less this holiday season: While consumer’s current spending has remained unchanged so far, after learning more about how Chinese tariffs could personally impact them through a quick prompt, 46% of participants stated that they plan to spend “significantly” or “slightly” less this year on holiday shopping.
  1. Tariffs will impact when consumers plan to do their holiday shopping: Half of respondents plan to do “some” or “all” of their holiday shopping earlier this year to avoid potential price increases associated with Chinese tariffs (tentatively going into effect on Dec. 15). Surprisingly, younger shoppers are more likely than older shoppers to do their holiday shopping earlier in the season to avoid higher prices related to tariffs. Twenty-four percent of those ages 18-29 said they plan to do ALL of their shopping earlier to avoid higher prices, compared to only 15% of respondents ages 45-60 and 13% of those ages 60 and older.
  1. Respondents became more interested in the news after learning more: After learning more about how Chinese tariffs could impact the holiday season, consumers were almost 20% more likely to plan to “regularly” follow the news as it develops. Thirty-four percent of respondents plan to “regularly” follow the news around the U.S. trade war/tariffs with China leading into the holiday season compared to 28% at the beginning of the survey.

“It was surprising to see how many consumers believe the tariffs will impact their holiday spending, given they won’t go into effect until December 15, “ said JoAnn Martin, VP Industry Strategy and Market Development at JDA Software.

“ Retailers will likely increase prices gradually throughout the end of the year, with the potential for a “big bang” effect to be felt after the holidays wind down," Martin added. "The general lack of understanding of the situation is the probable cause for consumers’ strong feelings about their upcoming holiday spend. Regardless, the ongoing trade war introduces uncertainty during the highest shopping season of the year and could cause many consumers to second guess purchases, which could have long-reaching impacts across the retail market.

She advises retailers to adapt their business processes. “The uncertain environment caused by the trade war leaves an increasingly small margin for inefficiencies along retail supply chains that can be minimized with artificial intelligence (AI) and machine learning (ML) solutions. Planning processes equipped with AI and ML capabilities will allow retailers to adapt in near-real-time based on the consideration of material news, changes in supply and demand and optimal sourcing options. Timely reactions to these swirling changes unlocked by AI and ML will give retailers the information and execution they need to align with consumer habits and preferences through accurate inventory management, demand forecasts and pricing optimization,” added Martin.

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