Despite caution around spending during the holiday shopping season due to economic fallout from the pandemic and subsequent inflationary pressure, consumers are expected to spend an average of $1,652 this holiday shopping season. That represents a 14% increase from a year ago, according to Deloitte’s 2023 Deloitte Holiday Retail Survey. It is the first time in three years consumer spending during the holiday shopping season will exceed pre-pandemic levels, according to Deloitte, which conducts the survey annually.
Along with spending more this holiday season, more consumers plan to purchase holiday gifts than in 2022. Some 95% of consumers surveyed plan to purchase a holiday gift this year. That’s up from 92% in 2022, and 88% in 2021. The trend also reflects a return to pre-pandemic levels, according to Deloitte.
“In recent years, we’ve seen consumers hold back on holiday spending, but this year, we are seeing higher planned participation during the holiday shopping season and higher spending, especially in categories we haven’t seen that in for a while,” says Lupine Skelly, retail research leader for Deloitte and a co-author of the report.
Gift card spending is up
One trend that stands out, Skelly says, is that gift givers plan to spend $300 on gift cards, on average. That’s up from $219 a year ago.
Gift cards are also a way for gift givers to ensure gift recipients receive a gift they want, but which the giver may not be able to purchase themselves. For example, gift cards can purchase an avatar for a video game or other types of digital goods.
“The increase in spending on gift cards is a way to put inflationary pressure on gift card recipients by making sure that gift givers are giving a gift that represents money well spent,” Skelly says.
Prices will determine holiday shopping
Other key trends to emerge include consumers seeking out more promotional deals to help stretch their budgets, and consumers budgeting for higher prices by planning to buy fewer gifts on average than the previous year, despite planning to spend more. In 2023, consumers plan to purchase eight gifts, on average, compared with nine in 2022, to compensate for higher prices.
Retail executives expect prices to be higher this holiday season. 56% expect a single-digit percentage increase and 19% expect a double-digit percentage increase. Deloitte surveyed 43 retail executives in the United States from June 23 to June 30. On the consumer side, 72% of consumers expect to see higher prices this holiday season.
54% of respondents who will shop online plan to add a gift to their wish list or shopping cart, then wait for a sale that will lower the cost of the item before purchasing it. Deloitte surveyed 4,330 consumers in the U.S. between Aug. 30 and Sept. 8 of this year.
Consumers will likely be active bargain hunters during the five-day stretch beginning Thanksgiving Day through Cyber Monday (also known as the Cyber 5). During that period, retailers offer some of their best deals of the holiday shopping season to drive sales. 66% of consumers plan to shop during this period, up from:
- 49% in 2022
- 47% in 2021
- 53% in 2020
Black Friday and Cyber Monday will most likely be the days when bargain hunters are most active. 31% of consumers plan to shop on each of those days, respectively. Another 25% of respondents plan to take advantage of October promotional events for the holiday season.
“We’re seeing more consumers planning to take advantage of promotional deals, especially Black Friday and Cyber Monday deals,” Skelly says.
Consumers want free shipping
Another factor driving consumers to seek out promotional deals is that the window for the holiday shopping season has shrunk in recent years from 7.4 weeks pre-pandemic to 5.8 weeks.
“As the holiday shopping window narrows, it puts more emphasis on promotional events,” Skelly says.
In addition to seeking out promotional deals, online shoppers this holiday season are more likely to seek purchase thresholds to receive free shipping. Eight of 10 respondents who plan to shop online this holiday season say they are willing to meet the minimum purchase threshold to receive free shipping. In comparison, six of 10 online shoppers say they would abandon their shopping cart if they discovered hidden shipping costs before checkout. On average, consumers say they want to spend $40 to receive free shipping, while retailers say they plan to offer free shipping this holiday season on orders totaling a minimum of $64, on average.
Holiday shopping plans vary by income level
While consumer spending is expected to increase across the board this holiday season compared to last year, middle-income consumers, those earning between $55,000 and $99,000 annually, are expected to have the highest increase in holiday spending. Consumers in this demographic expect to spend $1,534 on holiday gifts, a 26% increase from the previous year. Millennials who fall within this demographic expect to spend $1,949 on holiday gifts, a 35% increase from 2022.
High-income individuals, those earning $200,000 or more in annual salary, are also expected to significantly boost their holiday gift giving spend. Consumers within this demographic expect to spend an average of $3,922 on gifts this holiday season, a 22% increase from the same period a year ago. Within this demographic, women expect to spend 23% more than men.
Gifts are not the only thing consumers plan to spend more on this holiday shopping season. Many plan to spend more on gifts for themselves or their home. Some 75% of consumers say they can be tempted to purchase an item for themselves when gift shopping this holiday season.
82% of consumers say they plan to purchase a non-gift item this holiday season, compared with 77% in 2022, and 74% in 2021. Apparel, home furnishings and holiday decorations are expected to be the most popular non-gift items this holiday shopping season, with 67% of respondents planning to purchase apparel and 59% expecting to purchase the latter.
“Non-gift purchases are easy to cut out if a budget is tight. That consumers plan to spend more on non-gift and self-self-gifted items is a positive,” Skelly says.
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