This Holiday Season, Direct-to-Consumer Customers Demanded Deals

D2C, retail, online sales, direct to consumer

It was good deals or no deal for direct-to-consumer brands this holiday season.

This, as inflation-ravaged consumers sought value in all quarters to get the most from their dollars.

In reflecting back on the season, Victor Tam, co-founder and CEO of D2C travel and luggage brand Monos, noted in an interview with PYMNTS that consumer’s spending in November and December was concentrated toward Black Friday, with those who took a pass on these early deals often opting to trade down for lower-priced items later.

“A lot of people took advantage of the Black Friday sales,” Tam said. “We saw an overall increase year over year in volume during that period. People are being more mindful of inflation, so they’re really stocking up beforehand. [After] Black Friday, [we saw] a lot of the smaller items under $100 to be moving a lot more during this time.”

Indeed, data support this shift toward Black Friday across retailers. Research from PYMNTS’ study, “Black Friday 2022: High Prices Reshape Holiday Shopping Habits,” for which we surveyed more than 3,000 consumers on Black Friday and the day after, revealed that two-thirds of holiday shoppers made at least one holiday purchase on Black Friday 2022, up 3% more than in 2021.

Additionally, D2C brands benefitted from a shift to eCommerce. The study found that the share of consumers shopping only in-stores dropped five percentage points, from 22% to 17%, with more consumers adopting digital options.

Moreover, Mastercard’s SpendingPulse report for Black Friday revealed that eCommerce sales rose 14% on the day, exhibiting greater growth than brick-and-mortar sales, which increased 12%.

Certainly, as prices rise, discounts are top of mind for many consumers. Research from PYMNTS’ report “New Reality Check: The Paycheck-to-Paycheck Report: The Holiday Shopping Edition,” created in collaboration with LendingClub, revealed that promotions and discounts swayed 60% of consumers’ choice of where to shop over the holidays. Plus, 40% of consumers cited these as the single most important decider, a greater share than said the same of any other factor.

In addition to discounts, consumers also looked to buy now, pay later (BNPL) payments to manage spending amid inflation for their D2C purchases this holiday season.

In an interview with PYMNTS, Maurice Contreras, CEO and founder of D2C brand Volcanica Coffee, discussed the opportunity that BNPL presents.

“Delayed payments or spreading payments is a new area for us — we’re seeing some customers use that a little bit, so that’s a new trend,” Contreras said. “[It’s] really good for us because we have some coffees that are over $100 per pound, [so it’s] helpful for somebody that can buy it and spread the payments out over a few months instead of one time.”

Indeed, research from PYMNTS’ study “Deal or No Deal: Holiday Shopping 2022” found that the share of eCommerce shoppers using BNPL for their holiday season purchases rose 24%.

For all the demand for discounts and other ways to attract price-sensitive consumers, Tam cautioned against overly catering to that customer’s needs. Instead, he advised keeping the focus on the product and the brand in a way that encourages people to pay the premium for quality.

“I think we’re going to see companies that were just putting emphasis on lower pricing, with no emotional connection with customers, will really have issues, I think, in the next two years,” Tam said. “It’s brands that have another layer, in terms of its value proposition and storytelling, that are going to be able to win in that period.”

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.