From snagging the best Black Friday deals to booking flights, the holidays can be very stressful for consumers. That has only been compounded over the last few years by the evolving COVID-19 pandemic, inflation, worries about gifts and other items being in stock, and more.

Consumers’ changing demands have pushed retailers to dramatically change their business strategies. For example, retailers have needed to prepare for product shortages and increased online orders as supply chains across the sector continue to face challenges.

So how will things change again this season?

Preparing for the “what if’s”: Uncertainty around inflation, gas prices and supply chain is driving consumer plans

After years of COVID-19 driving consumer shopping decisions, we’re rounding a corner. Findings from this year’s global annual holiday shopping report from the IBM Institute for Business Value (IBV), polling 12,000 consumers across nine countries shows that consumers’ biggest area of concern this holiday season will be the economy—two in three surveyed reported saying they will be more concerned about the economy this holiday season than last year, and 59% said they’re less concerned about the COVID-19 pandemic.

The global IBV research shows nearly half of consumers surveyed will spend less if inflation continues to drive price increases. If they’re forced to cut their holiday shopping budget, over 60% of consumers surveyed will cut the non-essential categories like apparel, footwear, jewelry, and accessories. If goods are not available due to supply chain issues, 41% of consumers surveyed say they will spend less – but 30% will spend more if they can find substitutions easily. And if gas prices go down, 35% of consumers surveyed will do more in-store shopping.

Consumers are making shopping plans earlier but they want to keep their options open

The mix of rising prices and decreased availability of inventory mean that when consumers shop is just as important as where. The IBV research shows that almost two in three consumers surveyed plan to pre-order this holiday season to get their products on-time with guaranteed prices. This is already playing out in the market, with major retailers starting to offer holiday sales as early as the first week of October.

At the same time, consumers are hedging their bets. Nearly seven in ten consumers surveyed will opt for brands or retailers that offer free cancellations, order changes, and returns and a COVID-19-safe environment this holiday season. These perks are often worth the price due to the continued worries around supply chain and product availability this season. Compared to last year, 59% of consumers surveyed will be more concerned about supply chain disruptions that could make holiday shopping harder or more expensive.

Sustainability reminds top-of-mind for majority of consumers despite economic hardships

Consistent with last year’s IBV report, sustainability remains top-of-mind for consumers globally. Thirty-seven percent of consumers surveyed said sustainability will significantly affect their decisions when shopping for the holidays compared to 24% in 2021. Twenty-nine percent of consumers surveyed will bundle multiple orders to help reduce carbon emissions, while 38% will avoid single-use plastics, and two in five will choose to shop nearby (42%) and buy products that are branded as being environmentally sustainable or socially responsible (41%). Notably, consumers surveyed are willing to pay an average premium of 41% for sustainable products.

With conversations about sustainability and waste reduction increasing around the holidays— from the tons of wrapping paper thrown away post-holiday to fuel and paper goods used by retailers to ship their products—retailers and consumers have an opportunity to be climate stewards and take action to make more sustainable choices this season. As more purpose-driven consumers look for new features and offerings from brands and retailers, businesses that identify provide customers with new opportunities to connect with their brands in supporting sustainability initiatives will be rewarded.

What does this mean for businesses?

In 2022, consumers are hoping to re-embrace holiday traditions they’ve had to alter for the past two years. Many are committed to celebrating, regardless of what the next few months might bring. But how and where they shop could still be influenced by economic shifts or other forces of change. With even the best laid plans at risk of disruption, the retail industry is taking notice. Those embracing the uncertainty and leaning into technology like hybrid cloud and AI will win loyalty and sales this season.

By embracing technology, improving delivery, and creating new experiences for their customers, companies across the retail sector will be able to celebrate alongside their customers this holiday season.

Here are five steps companies can take to connect with consumers this holiday season

Karl Haller leads IBM’s Consumer Industry Center of Competency, where he works with retailers and consumer goods companies worldwide to digitally reinvent their businesses and operationalize the use of advanced capabilities across their enterprise. Karl has over 25 years of experience in retail, fashion, and consumer goods, and has served in executive positions in Strategy, Customer Engagement, and Marketing at Brooks Brothers, Tommy Hilfiger, The Limited, and Doner Advertising. Karl began his career in the strategy consulting practice at PricewaterhouseCoopers.