The curtain is about to rise on the holiday season. After years of pandemic restrictions and other disruptions, there are signs that consumers are ready to open their wallets and increase spending. But this does not mean that financial concerns—including inflation—have faded from consumers' minds. For marketers, if they can strike the right tone amid uncertainty, there is still an opportunity to end the year on a high note.

According to Deloitte's 2023 holiday retail survey, consumers are expected to spend an average of $1,652 per person this holiday season,up 14% year over year, surpassing pre-pandemic levels for the first time. With only a week to go until the Thanksgiving and Black Friday shopping rush, these optimistic forecasts are certainly encouraging for marketers. However, after a turbulent period, performance pressure has also heightened brands' anxiety about "doing things right," said David Sant, head of customer success at JuiceMedia.IO.

"There is definitely a sense of caution... Given everything happening in the world, the economic outlook remains unclear for some," Sant said. "Making the fourth quarter perform well has always been a must, but this year the pressure is especially pronounced and urgent."

In 2023, many brands aim to find the right balance in their messaging between lighthearted emotion and affordability. At the same time, other brands are betting on technology to win over digital-first younger audiences. Additionally, consumer preferences are shifting—such as a renewed interest in in-store shopping—which will prompt some companies to return to basic strategies.

The gift of value

Consumer sentiment has heightened marketers' hesitation. With inflation persisting, Deloitte data shows that three-quarters of shoppers expect prices to be higher than last year, while savings rates have declined and student loan repayments have resumed. Similar to last year, marketers hoping to win consumer spending not only need to offer relevant value propositions but also go further to cater to evolving customer needs.

"Clearly, inflation remains a top concern for many consumers. The vast majority of people we surveyed expect prices to be higher, but they won't limit their spending amounts because of it," said Brian McCarthy, head of retail at Deloitte. "They are just adjusting their budgets to match what they think their money can buy."

This year, marketers seeking to connect with consumers need to stay in tune with the majority who continue to express financial stress concerns. In this sense, the tone of messaging has not yet returned to the flashy and ostentatious style of the past, and is more likely to continuethe low-key and understated approach of 2022。

"In terms of the creative tone, I don't think it will be as somber as last year, but it will definitely not be as triumphant and self-satisfied as it was at certain times in previous years," Sant said.

Emotional appeal is one way to connect with stressed consumers. Earlier this month, Sam's Club partnered with Arnold Worldwide to launch a holiday campaign aimed atadvocating for togetherness over materialism. Amazon has also tapped into emotion with its global "Joy is shared" campaign, combiningthemes of friendship and nostalgia, accompanied by a rendition of the Beatles' "In My Life."

Cutting-edge technology is powering some of these heartwarming efforts.Coca-Cola's holiday campaign"The World Needs More Santas" promotes the idea that anyone can become Santa through acts of kindness, and plans to incorporate AI elements into its "Create Real Magic" platform. Meanwhile,LEGO is using augmented realityto host a transatlantic snowball fight.

Other brands are focusing more directly on saving money. This month,Target launched a seasonal campaignwith the slogan "Whatever way you celebrate, spend less." In October,JCPenney unveiled its holiday marketing strategy, also centered around savings opportunities, and aligned with the department store'soverall transformation planto help working families get more value for their money.

According to Gartner's 2023 Holiday Marketing Guide, as brands are expected to emphasize affordability, marketers looking to stand out may prioritize purpose and progress on environmental, social, and governance (ESG) goals. This approach could resonate with values-driven consumers; the report shows that 38% of respondents said their attitude or behavior toward a brand changed positively when advertising centered on inclusivity. Nearly half of Gen Z and millennials said that a brand's stance influences their purchasing decisions.

Similarly, ina year when the fallout from culture wars caught brands off guard, Gartner analysts emphasize that the holiday season is not the time to announce new commitments, but rather an opportunity to showcase progress on existing efforts. Brands should also be prepared to upgrade their response plans to handle any potential backlash.

"I think all marketers are wary of making headlines during the holiday season," said Kassi Socha, director analyst at Gartner. "Our biggest advice is that during high-traffic periods like the holidays, it's not the right time to launch new campaigns or plant a new flag and say 'this is where we stand.' It's a time to communicate progress."

Moment of inspiration

As consumers check items off their holiday shopping lists one by one, the traditional promotional window is regaining consumer interest. Deloitte data shows that promotions between Black Friday and Cyber Monday are expected to attract 66% of shoppers this year, up from 49% last year. Nearly a third of shopping budgets will be spent in the last two weeks of November.

"Retailers have been trying to get shoppers to start their holiday spending early, but this year, spending will shift more to November, with expenditures concentrated in November and December," McCarthy said.

Although consumers say they won't start holiday shopping as early this year as they did in 2022, according to Gartner, 19% say they buy holiday gifts throughout the year, up from 16% last year.

The timing of consumer spending influences when brands launch campaigns and which channels they choose, including when to air holiday TV ads. According to measurement firm EDO's Holiday TV Effectiveness Report, last year consumers were most likely to engage with TV ads from DTC apparel brands in the week after Christmas. Meanwhile, engagement with TV ads from department stores like Walmart or Kohl's peaked in mid-October last year, when fewer ads were airing, suggesting that early launches can pay off.

"Ads in many categories see high engagement rates when they launch holiday campaigns in October," said Kevin Krim, president and CEO of EDO. "They see higher response rates, shown by people searching for their brand, searching for those products, and visiting their websites."

Social media is also heating up in a similar way. Deloitte found that 34% of consumers plan to do holiday shopping via social media this year. Gen Z consumers are quickly turning to social media for gift inspiration, and Imani Albert, associate strategy director at Movers+Shakers, believes brands should leverage this insight when trying to increase awareness among younger generations.

"It's important to match Gen Z's pace of talking about the holidays earlier, preparing earlier, and feeling the holiday spirit earlier, so starting marketing early to provide gift ideas is crucial, especially on social media," Albert said.

Among this year's social media holiday marketing trends, Albert expects gift guides to be very popular, as Gen Z values purposeful gifting rather than a one-size-fits-all approach. Accordingly, influencer collaborations will become a common strategy for connecting with consumers seeking advice.

Despitelackluster results so far, Albert is still betting on the newly launched TikTok Shop to close the shopping loop. TikTok continues to bea top platform for Gen Z consumers, and its e-commerce feature, officially launched in the U.S. in September, could become an effective way for brands to offer a complete shopping experience.

"We tell clients that if you haven't joined TikTok Shop yet, go do it now," Albert said. "The algorithm tends to prioritize these posts."

Making in-store shopping more enjoyable

In terms of shopping venue preferences, according to Deloitte data, pure-play online retailers and mass merchants are the top formats for consumers, at 63% and 53%, respectively. The consultancy says these figures are consistent with trends observed in 2019. In-store purchases have also recovered to pre-pandemic levels, accounting for 37% of consumer budgets in 2023.

This year, many brands are trying to capitalize on the resurgence of consumer interest in tactile experiences. JCPenney hascreated more destinations in storesto boost sales of big-ticket gifts. Target, meanwhile, istaking its Target Wonderland pop-upon tour across multiple cities, returning to experiential marketing and increasing investment in in-store events.

The Gartner report details that the in-store shopping recovery is a key opportunity for CMOs to address declining store profitability. Gartner's Socha says brands should enhance the physical experience with added conveniences such as same-day delivery, curbside pickup, and returns, which could make a difference amid the sea of red clearance tags.

"If we can create some kind of pop-up experience, a cool in-store shopping experience, or a way to connect with the brand in reality, that will resonate with consumers," Socha said. "In the years since the pandemic, there is a longing for being in physical spaces with brands."