Follow the trends and consider these ways to serve your members’ needs in the current environment.
Holiday shopping season is underway, and despite challenging economic headwinds, there are still opportunities for you to capture revenue growth from your members’ use of their credit union-issued credit and debit cards.
The National Retail Federation is expecting slower growth this holiday shopping season. The industry trade group recently predicted sales will rise between 6% and 8% to between $942.6 billion and $960.4 billion from Nov. 1 through Dec. 31.
Despite this year’s slower growth versus 2021, which saw spending rise by over 13% compared with the pandemic-burdened 2020 season, this year’s anticipated sales total would still represent a record. Consumers are expected to purchase fewer gifts this year, but the overall spend per shopper will likely remain on par with last year due to the rising costs of merchandise.
3 Key Trends
Here are three payments trends that I see, based on the performance of the Co-op Solutions portfolio of credit and debit cards in the early stages of the holiday season:
1. Retailers pushed early shopping—but it’s not too late. Retailers heavily promoted pre-season shopping to help consumers reactivate their spending habits. The “Black Friday Starts Now” promos were running back in October! Those merchants that invested heavily in inventory over the summer are in the most precarious position and are most likely to offer aggressive pricing discounts in December. Consumers will do much of their early shopping online, whereas last-minute shopping caused by unforeseen shipping delays or procrastination will be primarily done in-store.
You can capture these holiday purchases with simple communication methods (emails, self-mailers, blogs, pop-up alerts) that inform your members of your credit union’s low rates and exceptional service. At the same time, you can remind them to use your card when they shop local; add your card to retailers’ online shopping carts and recurring purchases; and teach them how to add your card to digital wallets and use their digital wallet once your card is added.
2. Inflation concerns not tightening purse strings just yet. Households are growing increasingly concerned about the impact of inflation. Yet spending continues to rise with an 11% increase in credit spend while debit remained flat year-over-year. With holiday deals increasing and the magic of the season upon us, it seems inflation concerns, including its looming impacts, will be set aside through the end of 2022. Q4 spending is predicted to continue its positive growth trend. Make a difference in your members’ lives this holiday season through diligent training that prepares your staff to handle member issues related to holiday stressors. By doing so your organization will deliver exceptional member experiences when members may need them most.
3. Shift to credit for key spending categories. For those shoppers who plan to outdo holiday gift spending from past years, many will be more likely to put their purchases on credit over debit, while debit users will stay on track from 2021 holiday spend.
Consumer spending is always unpredictable, and the traditional holiday shopping season has been upended over the past three years due to a range of unprecedented factors. Variables this year include inflation rates, borrowing rates and unemployment figures. Of course, COVID is still hanging around, and any surge in cases may yet impact the public’s willingness to do in-person shopping and other activities outside their homes. Given this spending environment, here are some steps additional steps—beyond the suggestions above—that credit unions should take right now.
Additional Steps to Take
Activate your “spend-and-get” campaigns. Make sure you’re incenting your members to use your cards when they do their shopping by boosting rewards for select merchant category codes through a spend-and-get campaign. This can be done in a variety of ways, including offering double or triple rewards points or crediting dollars directly to members’ checking or savings accounts for purchases in certain category codes. And don’t forget about your local merchants!
Offer special low annual percentage rates. With interest rates rising and consumers becoming more cost-conscious, special low rates for purchases and balance transfers (especially for next year’s post-holiday timeframe) are particularly attractive to your members right now. Like spend-and-get campaigns, this is a great way to incent members to keep your cards top of wallet.
Promote contactless and digital payments. If you offer contactless cards or digital wallet provisioning in your product toolset, now is the time to promote these methods, as shoppers continue to migrate toward e-commerce and using contactless payment methods in-store.
Promote and grow your brand with member loyalty strategies. According to Coveo’s 2022 Holiday Shopping report, 67% of consumers are interested in product recommendations with Gen Z (21- to 28 -year-olds) at 40%. This sought-after population continues to place high regard on brand loyalty, especially if its values align and are endorsed by family and friends. What does this mean for credit unions? Use your established member relationships to build your membership through word-of-mouth recommendations; monitor online reviews (make sure you address and respond to each and every review!); and highlight your unique value proposition and excellent service through omni-channel marketing.
Motivate members to place your card on file. Subscriptions continue to grow in popularity across a wide range of merchant segments, from automobiles to streaming services. Plus, they are a top gift during the holiday season. Look for ways to educate members on the benefits and convenience of provisioning your card on file with such services, as well as in popular shopping sites like Amazon, Target and Best Buy.
Start thinking about balance transfer campaigns. Many consumers will likely end up with balances to pay off come January. Why not plan a balance transfer campaign for the first quarter of 2023, when consumers will be seeking relief through low-rate offers? It takes time to implement such campaigns, so you will need to get started now.
Give your team and your members something to sing about this holiday season!
Beth Phillips is director of strategic portfolio growth for Co-op Solutions, a provider of payments and financial technology to credit unions and a CUES Supplier member.