With the holidays still around and inflation still hot, many consumers are starting their purchases earlier this year.
Since overall product prices have risen about 10%, shoppers shop less and gift less, while spending roughly as much as they did last year collectively. It costs an average of $1,455 per household this year, according to Deloitte’s 2022 Holiday Retail Survey.
Americans are expected to buy an average of nine gifts, down from 16 last year, while also pulling back on non-gift purchases like holiday décor.
“Consumers are going to spend as much as last season, but they’re limiting what they’re spending on. They only have a certain amount of money, so they have to tighten the list of who they buy gifts for. “Due to the increased prices, their dollar won’t go down as much as they did last year,” said Howard Dworkin, chairman of Hai Debt.com.
Inflation is also pushing more people to choose gift cards as a gift to make it easier to stretch their holiday budget.
“People are familiar with the challenges and struggles of inflation, and as a result they are letting the receiver determine what to do with the money,” Rod Sides, retail analyst at Deloitte Insights, told CBS MoneyWatch.
More shoppers than usual began looking for Christmas gifts in October, worrying that supplies would be disrupted and the popular item could become expensive closer to the holidays.
Dworkin said, “At the moment consumers fear more than anything else they can’t get their hands on that perfect gift, so they’re going to buy it now whether it’s on sale or not. They fear that if they wait.” So it may not be available,” Dvorkin said. “Due to their limited supply, retailers will probably maintain similar pricing without discounts for moving goods.”
going back to the stores
Habits formed during the pandemic, such as consumers shifting more of their spending online versus in-store, will remain this year. But according to Adobe, online spending is expected to grow only 2.5% this year compared to growth of 8% in 2021.
“It’s more muted, but there’s something to be said for the continued flexibility of online spending and the persistence of spending at these levels,” said Vivek Pandya, analyst at Adobe Digital Insights.
According to Adobe, huge discounts on personal electronics such as computers will help drive spending.
“Retailers in some areas are trying to lock out excess supplies. Because there were shortages and stockouts during the pandemic, they are now in a situation where they have a very high supply of certain products,” he said.
At this stage in the pandemic, consumers are more comfortable entering stores, and Adobe estimates that more people will shop for clothing at brick-and-mortar stores, reducing online spending on apparel by about 7%.
Pandya said, “A lot of consumers like to try on clothes and certainly feel a lot more comfortable going into stores than they felt a few years ago around this time.” “It’s helping drive momentum for categories like apparel in-store and going down what it means for online spending for a category like apparel.”
will travel to hug
Lower-income consumers are expected to pull back this year on total spending on retail categories and travel. According to Deloitte, 42% of Americans said they intend to travel last year, up from 31% in 2022, reducing travel spending by 11 percentage points across the wider US population.
More affluent consumers are now eager to travel as most COVID-19 restrictions have been lifted.
“Sweaters are cool, but what people really want during the holiday season is a warm embrace of loved ones, and they’re taking to the streets and skies to do just that this holiday season,” said Mike Dahr, vice president of transportation. Said Deloitte.
“I expect airports and hotels to be very busy this holiday season, so what’s going to happen is that high-income families will increase the demand for travel and low-income families will choose to stay home,” he said.