Consumers are more inclined to spend on the upcoming holiday season compared to last year, but they still exhibit caution due to ongoing economic challenges and uncertainties. As researchers noted in a recent study by Circana, shoppers appear to juggle anticipation and anxiety as they gear up for festivities.
The survey revealed that on average, consumers plan to spend approximately $771 during this festive period, marking a 2% increase from 2023, though it remains 2% below the projected spending in 2021. This increase, albeit modest, signifies a positive shift in spending behavior as consumers navigate a landscape influenced by inflation, rising interest rates, and supply chain concerns.
Marshal Cohen, chief retail advisor at Circana, expressed optimism about this holiday season, noting that “this year’s holiday comes with some optimism and some distractions.” As shoppers adjust to their financial environments, Cohen highlighted a noticeable decline in some food price pressures, intersecting with better-value offerings from retailers, which appears to fuel a slightly more confident consumer base.
The survey coincides with other encouraging findings: 57% of respondents reported feeling more optimistic about their financial situation than the previous year, while 64% expressed excitement for the holidays. Notably, 66% viewed this season as a necessary break from a world filled with uncertainties. Such psychological nuances could drive increased purchases.
Translating this optimism into spending behaviors, nearly 40% of survey participants indicated a plan to acquire more gifts for others, aiming to spread joy in what many deem challenging times. Moreover, 28% are engaging in “retail therapy,” intending to buy extra gifts for themselves. While this self-gifting trend is rising compared to last year, it has not yet reached the fervor seen during the post-pandemic period of 2021.
Cohen identified the re-emergence of self-gifting as a crucial element for retailers to consider this holiday season. The absence of this trend in recent years has impacted holiday expenditures, making its resurgence vital for overall growth. Despite potential distractions from the political landscape and unpredictable weather conditions, consumer resilience remains robust.
Another significant insight from the research revolves around the advancements in early holiday shopping. Retailers are launching initiatives earlier than ever, as evidenced by unique promotions kicking off mid-October, spearheaded by major players like Amazon, Target, and Walmart. Many consumers have already started their holiday shopping during the previous summer promotional events and are poised to capitalize on fall sales—setting a different tone than previous years.
However, there’s still a strong belief among consumers about finding the best deals on traditional Black Friday, as almost 24% of those surveyed anticipate optimal discounts on this famed shopping day. This highlights a blend of traditional habits and evolving shopping behaviors.
For retailers, these insights present a clear opportunity. Engaging consumers with creative marketing strategies that highlight value, joy, and timely delivery will be vital. Retailers must strike a balance between discount offerings while promoting the emotional value of gift-giving.
In summary, consumer behavior this holiday season seems to reflect cautious optimism, with spending intentions that can benefit both consumers and retailers alike. As shoppers prepare to navigate their festive budgets amidst macro-economic challenges, it is crucial for brands to listen and adapt their strategies accordingly, unlocking new opportunities for growth and engagement.
Overall, this holiday season might just be a year of rebound, but it would require retailers to remain agile and highly attentive to shifting consumer sentiments.
