How to attract budget-conscious shoppers this holiday season
November 11, 2013

Small and medium-sized retailers that choose to offer gift card programs and loyalty programs to their customers will likely have a better chance at a maximizing revenue during this year's holiday shopping season. Current economic conditions have caused many consumers to limit their spending habits in ways that may raise alarms for businesses that depend on high volumes of sales during the last months of the year.

According to this year's "Holiday eCommerce" from Visa Canada, shoppers throughout the country will be especially conservative this year in terms of the amount of money they spend on gifts for friends and relatives. The report found nearly 50 percent of Canadians surveyed said they will only spend between $100 and $499 this year. Additionally, only 16 percent said they planned on making more purchases than they did in 2012.

Consumers in the U.S. will also likely hold back during the holidays this year. The Wall Street Journal recently reported the latest data from the Thomson-Reuters/University of Michigan index of consumer sentiment fell to a two-year low in November. Last month's index measured 73.2 points. However, November's reading fell to 72, which doesn't bode well for the near future.

"The holiday retail sales season is looking relatively modest," IHS Global Insight economist Chris Christopher, told the Journal.

Consumer spending habits continue to be relatively conservative because personal income levels have only grown in small increments in recent months, according to data from the U.S. Department of Commerce. Many individuals are also more interested in saving money until the economy picks up.

How can retailers bring reluctant shoppers into the door?
Just because shoppers have a tighter grip on their wallets doesn't mean businesses have to take a hit during this year's holiday shopping season. In fact, store owners can appeal to consumer sentiment by offering high-quality loyalty programs that provide rewards for repeat visits and continued purchases. Whether in brick-and-mortar establishments or through e-commerce channels, a dynamic and engaging rewards program is often all it takes to encourage shoppers to feel better about spending. The ability to earn rewards is something that may factor into a consumer's budget. As a result, businesses that offer loyalty programs tools can ultimately make the most out of the holidays and limit the negative impacts of a struggling economy.

Nexus: G-WEBCD1