Holiday spending and participation return to pre-pandemic levels spurred by bigger budgets for non-gift items like decorations
NEW YORK, Oct. 17, 2023 /PRNewswire/ —
- Holiday shopping is back, with spending expected to surpass pre-pandemic levels for the first time. Consumers surveyed plan to spend an average of $1,652, representing a 14% year-over-year increase, though a modest four-year CAGR of 2.5% reflects a normalization of trends.
- Nearly all consumers surveyed plan to participate in the holiday season (95%, up from 92% in 2022 and 88% in 2021), reflecting a return to pre-pandemic levels.
- Nearly three-quarters (72%) of consumers surveyed expect higher prices and plan to navigate inflation by budgeting for fewer gifts (eight versus nine in 2022), spending more on gift cards ($300 versus $217 in 2022), and seeking out deals (66% plan to shop Black Friday — Cyber Monday (BFCM) versus 49% in 2022).
- Nearly one-third of shoppers’ budget will be spent in the last two weeks of November, with 78% actively shopping during that period.
- Student loan repayments are a lump of coal for some but will likely have a minimal impact overall on the holiday season.
Why this matters
Consumers intend to make this holiday season memorable. For 38 years, Deloitte has studied consumer behavior and sentiment ahead of the crucial holiday shopping season. This year’s “2023 Deloitte Holiday Retail Survey” examines what retailers can likely expect from consumers shopping for the holidays. Many shopping trends tracked during this survey represent a return to pre-pandemic norms, demonstrating the opportunity for a jolly season for consumers and retailers alike.
Holiday spending finds merry momentum
Even as the economy continues its uncertain trajectory, most consumers surveyed plan to spend this holiday season on gifts, but are also looking to decorate and participate in holiday experiences. For the first time post-pandemic, holiday shopping is predicted to surpass 2019 levels with an average expected spend of $1,652, up 14% from last year. All income groups plan to spend more this year, with the middle-income group (those making $50,000 to $99,999) seeing the most significant gains and intending to spend 26% more year-over-year.
- Nearly all consumers (95%) plan to shop for the holiday season this year, up from 92% in 2022 and 88% in 2021.
- Consumers said non-gift purchases (+25% YoY) are a priority this season as they restock holiday decorations, furnishings and non-gift apparel.
- Seven in 10 (72%) consumers surveyed expect higher prices — similar to last year despite moderating inflation — particularly in key categories, including food and beverage (86%), clothing and accessories (82%), and electronics and accessories (80%).
- Consumers are less confident in their ability to stay within budget (57% in 2023 versus 63% in 2022) and are modifying their behavior accordingly: They plan to purchase an average of eight gifts compared to nine in 2022, and 54% plan to add items to their wish list or online shopping cart to wait for deals, up from 48% last year.
- Gift cards gained ground on other gift categories perceived as having higher prices, like apparel and food and beverage. The average consumer plans to spend $300 on gift cards, up from $217 in 2022. Consumers may see gift cards as a potential way to get ahead of or hedge inflation.
- Nearly 30% of shoppers will be responsible for almost 70% of the holiday spending this year, spending an expected average of $2,146 or more this season. These high spenders are focused on high-quality products, while other shoppers focus on getting a great deal.
- Three-quarters (75%) of consumers are tempted to buy a gift for themselves, mainly if it is practical or useful. However, 53% say they will reduce self-gifting to preserve their budget.
- While 17% of consumers surveyed have student loan payments resuming this fall, the impact will likely be minimal as less than half (48%) plan to cut back on holiday expenditures, and one-third (32%) do not expect to change their holiday plans.
- Shoppers who prefer to shop for sustainable gifts spend 29% more on average than those who do not. Over half (55%) of younger shoppers plan to purchase sustainable gifts, up from 48% in 2022, compared with only 35% of older generations.
“Although inflation shows signs of moderating, consumers have come to expect higher prices and are adjusting their holiday spending accordingly. We expect to see shoppers make their lists and check them twice for deals, but a return to pre-pandemic spending levels shows promise for the season overall. Retailers can expect continued store growth as shoppers aim to maximize their budgets with their favorite retailer, presenting new opportunities to build loyalty.”
— Nick Handrinos, vice chairman, Deloitte LLP, and U.S. retail, wholesale and distribution and consumer products leader
Consumers seek out deals to stretch budgets and keep the season festive
Consumers plan to shop in-store as they search for deals and avoid shipping costs this holiday season. Retailers can capitalize on customer loyalty by offering options regarding where and when shoppers check out.
- Preference for in-store purchases returns to 2019 levels: 37% of the budget will be spent in-store (compared to 36% in 2019). This year, only 28% of shoppers plan to leverage Buy Online Pay in Store (BOPIS) to acquire gifts, down from 35% last year.
- Consumers cite the top reasons for spending more in-store as the ability to interact with the product (44%), to ensure product quality (39%), and to avoid shipping costs (28%).
- Loyalty matters: 76% of consumers often or always shop at their favorite retailer.
- Consumers continue to value convenience for their holiday shopping, citing online-only retailers (63%) and mass merchants (53%) as the most preferred retail formats.
- Eight in 10 online shoppers are willing to meet a minimum purchase to earn free shipping and are willing to spend $40 on average.
- Eight in 10 consumers (79%) have little to no trust in retailers’ ability to use AI responsibly in their operations — only 2 in 10 plan to use Generative AI for holiday shopping, primarily to look for deals.
Timing is everything
Inflation-wary customers hope to make the most of key promotional events and are holding on to traditional timing to stretch their budgets. The promotional timing will likely be crucial as consumers intend to wrap up their shopping quickly.
- Holiday lists are shorter this year (eight gifts versus nine last year), causing consumers to visit fewer stores (4.2, down from 5.9 last year) and wrap up their shopping faster (with an average shopping duration of 5.8 weeks versus 7.4 weeks in 2019).
- Although retailers are tempting 24% of consumers to shop for October promotional events, most spending will occur in late November and early December.
- Two-thirds (66%) of holiday shoppers plan to shop during Thanksgiving week, versus 49% in 2022, as inflation-wary shoppers plan to take advantage of BFCM deals to offset rising prices.
“After several years of uncertainty, shoppers return to the familiar to make their holiday celebrations shine. They plan to frequent their favorite retailers and focus their shopping during the traditional late fall period. With customers planning to shop fewer weeks, retailers have a shorter amount of time to gain consumers’ attention, highlighting the importance of the November promotional events this holiday season.”
— Brian McCarthy, principal, Deloitte Consulting LLP
Deloitte’s “2023 Holiday Retail Survey” is based on a survey of 4,330 consumers fielded between Aug. 30 and Sept. 8. Deloitte also surveyed 43 retail industry executives, of which 93% were from retailers with annual revenues of $1 billion or more, conducted June 23-30.
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Originally published at https://www.prnewswire.com/news-releases/deloitte-holiday-shoppers-are-back-in-the-spirit-of-spending-301958111.html
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