It’s easy to see that it’s the holiday season. The lights are up. Trees are up. And indoor spaces in regions that never see snow look like a winter wonderland. But what exactly does that all mean for small businesses, Q4 cash flow, and how consumers will celebrate the holidays in 2022?

Inflation 2022/2023

The main thing on everyone’s mind is inflation. Or is it? According to some surveys, 74% of consumers plan on spending as much on the holidays as they did last year. But for individuals on fixed incomes (which means most Americans), that’s going to mean pinching pennies in other areas of spending.

As of 2022, food has increased by 10.9%, with some items like eggs increasing by a whopping 25.6%. Especially important in the winter season is energy, which has increased by around 17.6% this year. Consumers looking to get something for everyone in the family may need to lay off the omelets and wear sweaters at home.

But amazingly, polled consumers plan to spend an average of $1,430 this holiday season, between gifts, travel, and entertainment, which is nearly identical to the $1,447 they spent in 2021.
Old habits die hard, and tickets to the Nutcracker are a family tradition. Perhaps these facts reflect the emotional pull of the holiday season, especially in times marked by societal and economic destabilization.

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BNPL(Buy Now Pay Later)

With gas and groceries tightening so many wallets (and belts), many consumers will turn to the old purchasing model of buy now, pay later. While for decades, this has simply meant using credit cards or store financing, online shoppers now have a plethora of BNPL options proffered by fintech startups like Klarna, Affirm, and Afterpay. These integrations offer consumers some excellent advantages over credit cards, such as 0% interest and no credit check.

By contrast, consumer credit cards can be very difficult to get, and of course, they come with interest payments. Consumers are responding positively to the BNPL, especially as the holiday’s approach.

As many as 40% of polled consumers said they would use BNPL options to fund as much as 50% to 99% of their holiday shopping. The same poll uncovered that the BNPL may also facilitate more spending…after all, if you don’t have to pay for everything upfront, why not pay more?

While around 20% of BNPL shoppers said they’d spend more than $1,000 this holiday season, only 16% of non-BNPL shoppers (e.g. those using cash, credit, or debit) said they’d be willing to spend the same amount.

Merchants have also responded positively to fintech options like Klarna, which is partnered with over 450,000 retailers already and is facilitating more than 2 million daily transactions.

Supply Chain Woes

Supply chain woes are another factor that will impact the holiday season. Over the last few decades, the global supply chain has become increasingly more complex, more delicate, and more easily breakable with the slightest disturbance.

Covid related closures have resulted in a cascade of side effects, with container ships backed up at ports and empty shelves in a store near you. As many as 95% of polled merchants report they need to adjust their holiday planning in response to supply chain issues.

These supply chain woes are passing through to consumers, 68% of them shopping earlier this year. And in addition to different products or even empty shelves, consumers will need to face some higher prices, with only 19% of merchants absorbing the rising costs of the supply chain.

Supply chain pundits are forecasting that some specific categories of goods may be impacted, including wine, coffee, toys, and things made out of paper…which include books and toilet paper (here we go again, you’re thinking).
While it’s true that labor shortages have created some of these supply chain woes, others—like agricultural products—have been caused by poorly timed natural events like adverse weather, or geopolitical conflicts like the turbulence in Eastern Europe.

Couple at an airport in front of a christmas tree

Travel Plans

Travel is an essential part of the holidays if movies ingrained in our cultural consciousness tell us anything (we’re thinking of Home Alone). Unfortunately for many Americans, inflation has 79% of polled consumers suggesting they will be tweaking their travel arrangements in 2022 and early 2023.

For instance, 23% of holiday travelers, according to the same research, will save money by keeping their travels more local. While this is bad news for exotic destinations, it might be good news for local venues in the hospitality and entertainment space.

One contributing factor is the cost of airfare, which has soared 33% in the past year. And although rental car prices have come down a little bit, gas has increased by 25% or more. Around 75 million consumers who are traveling for the holidays will put these expenses on a credit card. Which will result in a potential $3.3 billion in interest payments if they take an average of three months to pay it off (just in time for Spring Break).

And now the question that everybody wants to know the answer to…for those travelers heading to exotic destinations outside the United States, where will those travelers go? One traveler’s insurance poll listed some destinations that might surprise you, including Israel, Spain, Canada, and Columbia. For travelers who don’t want to break out a passport, top domestic destinations include New York, Seattle, Orlando, Phoenix, and Los Angeles.


Remember the reason for the season, they always say. One aspect of consumer spending during the holiday season is not about me, myself, and I, and that’s giving. Giving Tuesday is the prime day for giving back, at least according to popular consumer sentiment.

The holiday was created in 2012 to offset Black Friday and Cyber Monday. But as it turns out, Giving Tuesday is actually the second biggest day for donations to nonprofits. The first is December 31st, and it’s easy to see why…this is the last day of the tax year, and the last opportunity to lower your taxable income with a nice donation.

In 2021, 56% of Americans donated to charity, with the average donation being $574. Baby Boomers tended to donate more frequently (with 60% of them opening up their proverbial wallets). But millennials on average donated a slightly larger amount, around $637.

At the same time, giving levels have dipped from pre-pandemic years, which is understandable given the havoc that has unfolded in the realm of many consumers’ personal finances. Food banks (34% of donations), religious institutions (32%), and animal-related causes (32%) were actually the biggest recipients of charity in 2021.

2 young women laughing together while christmas shopping

Shopping Habits 2022

The day after Thanksgiving has long been regarded as an exciting time to line up outside a store in the early hours of the morning for doorbusters, prizes, and amazing deals. Some polls found that around 32% of shoppers would do their holiday shopping in person, a 9% decrease from 2021.

The biggest online shoppers were millennials, Generation Z, and women. A significant number of online shoppers, around 42%, are using mobile devices to do their holiday shopping. Although this is a surprisingly low 5% increase from the previous year. Suggesting that many consumers still prefer online shopping on larger screens.

This of course means that merchants need to have a mobile presence and integration with a payment processor that can create a seamless checkout experience. Online shopping is big business in the United States, with projected eCommerce earnings of $239.3 billion, up from $213.6 billion in 2021.

If you’re wondering what exactly consumers are spending money on, research shows that the biggest categories are toys, jewelry, electronics, and clothing. In any case, there is an undeniable trend toward online shopping. Especially omnichannel shopping experiences across social media platforms.

This means that brick-and-mortar businesses are going to need to put more focus on creating an experiential shopping experience. The holidays are an excellent time for this, since decorations, samples, music, and events (like a visit from Santa Claus) can generate some engaged foot traffic…and sales.

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What Does 2022’s Consumer Spending Habits Mean for Business Owners?

Contrary to what intuition might tell you, many polls are finding that consumers are not going to change their holiday spending habits. However, supply chain difficulties might have something to say about their commitment to tradition.

At the same time, consumers are likely to change up their travel plans a little bit, staying closer to home or driving instead of flying. They enjoy the convenience of shopping from home, but brick-and-mortar locations can still compete by creating experiential value.

And while giving has dipped a little bit since pre-pandemic levels, Americans are still interested in being generous…especially when it’s tax deductible.

The reality of inflation is such that 2023 looks to be shaping up like another year of price increases. And with numerous large companies initiating significant, poorly-timed holiday season layoffs, there may be a perfect storm in the realm of personal finances for many Americans. It will be interesting to see how consumer spending habits in 2022 impact lifestyles and spending habits after they ring in the New Year.

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