Although consumer holiday spending is expected to be down slightly from last year, it still should still be quite healthy, especially given this year’s pandemic and economic downturn.
Consumers plan to spend an average of $997.79 on gifts, holiday items such as decorations and food, and additional “non-gift” purchases for themselves and their families, according to the annual survey conducted by the National Retail Federation and research firm Prosper Insights & Analytics.
“Consumers have demonstrated their resilience and adaptability throughout these extraordinary times,” commented NRF President Matthew Shay.
U.S. ports covered by NRF’s Global Port Tracker handled an estimated 8.1 million TEUs from July through October, the peak shipping season. That is an increase of 6.1% over last year and beats the previous record of 7.7 million TEU set in 2018.
While overall spending plans are down by about $50 from last year, NRF says nearly all ($45) of the decrease comes from consumers’ hesitation to use seasonal sales and promotions to buy other, non-gift purchases for themselves and their families.
Spending on gifts is on par with last year, down by only about $8. Per person spending on holiday items like decorations is actually up slightly. Expected spending remains significantly higher
than the five-year average for both those categories.
The holiday season has been top of mind for many consumers, with 42% having said they planned to start their holiday shopping by the end of October and another 41% in November.
One in five (19%) holiday shoppers say that they typically travel for the holidays but will stay home this year, and 53% of those who changed holiday travel plans said they are likely to spend more on holiday items this year specifically because they will not be traveling.
With holiday inventory and promotions starting even earlier than usual, consumers remain flexible with their holiday shopping plans, NRF observes. The vast majority of those polled admit they could be convinced to start shopping earlier than they do through incentives like holiday deals or to avoid crowds or the stress of last-minute shopping.
They also are choosing to take advantage of a variety of offerings from retailers this holiday season, including earlier sales promotions and shipping options, says Prosper Executive Vice President of Strategy Phil Rist. “Consumers are focusing on making the holidays special for others but are playing it by ear when it comes to those ‘extra’ items they might get for themselves.”
As online sales have skyrocketed during the pandemic, it comes as no surprise that the majority (60%) of consumers say they plan to purchase holiday items online this year. Nearly all (91%) online shoppers plan to take advantage of free shipping, while another 44% plan to use buy online, pick up in-store and 16% plan to use same-day delivery.
Other top holiday shopping destinations for consumers include department stores, which were mentioned by 45%, discount stores, 43%; and grocery stores or supermarkets, 42%.
Deloitte Weighs In
Based on its survey, the management consulting firm of Deloitte expressed optimism about gift purchases, while noting other spending is down.
“This holiday season is going to test even the best supply chains and logistics,” says Stephen Rogers, executive director of the Deloitte Insights Consumer Industry Center. “Retailers who successfully address last mile requirements this season will like what they find in their own holiday stocking.”
Deloitte points out that while the majority of consumers (71%) are in a similar or better financial situation than last year, nearly one in three (29%) say that their household’s financial situation is worse year over year.
Given the financial uncertainty, 38% of consumers say they plan to spend less on the holidays, a level not seen since the Great Recession, Deloitte reports.
As consumers cut back on travel and other holiday experiences, they’re planning on celebrating the season with loved ones at home and focusing their spending more on non-gift items like home, holiday furnishings and non-gift apparel.
For example, Deloitte found that consumers are expected to spend $435 per household on non-gift purchases this holiday season, accounting for nearly a third of household holiday spending and representing a 12% increase from last year.
Travel and socializing away from home are expected to decline 34% year over year, to $260 per household. At the same time, spending on gifts and gift cards is forecast to be $487 per household, a decline of only 5% from 2019.
Ongoing anxiety spurred by Covid 19 continues the shift from in-store shopping to contactless options.
Deloitte found 51% of consumers are anxious about
shopping in-store and 49% say they will not return to their pre-Covid shopping behavior until there is a reliable vaccine.
Among those who plan to shop predominantly online, nearly two-thirds of consumers will shop online to avoid crowds (65%), because they prefer the convenience of shopping at home (64%), and want to take advantage of free shipping or delivery options (60%).
More than two-thirds (69%) of consumers said they prefer shopping at a store closer to their homes, and that 64% of their shopping budgets will be spent online during the holidays.
As consumers seek out safe and convenient options, 35% of shoppers indicated preference for buy online and pick-up in store (BOPIS), and the use of curbside pick-up (27%), which is expected to more than double from last year.
Free return shipping also is expected to be in high demand, and 70% of consumers say they prefer a retailer who offers this option to also make product returns most convenient.
Although consumers emphasize that safety and convenience are important to them, Deloitte says that when making purchasing decisions a “great deal” continues to win, with 61% of consumers noting its relevance when selecting a retailer.
While gift cards (48%) and clothing (43%) are among the top gift items this year, more than 30% of holiday budgets will be on non-gift items.
As consumers look for items to purchase for themselves, 45% will wait for holiday sales to buy big-ticket items for the household. Consumers also say they plan to stay close to home and indulge on beverages (33%) and food items (30%).
With fewer shopping days this year, 61% plan to begin shopping before Thanksgiving, with an expected average spend of $1,537 per household;
39% plan to begin shopping on Thanksgiving or later, with a forecast average spend reaching $1,149 per household.
Consumers who plan to shop on major event days also plan to spend more than the average shopper will. Marking the switch to ecommerce, consumers of all age groups are likely to rely more on Cyber Monday (29%) than Black Friday (24%).