Dive Brief:
- As holiday retail sales are expected to increase, holiday shopping budgets are expected to grow 14% from last year to $1,652 on average, according to Deloitte’s 2023 Holiday Retail Survey of 4,318 U.S. consumers. This year’s holiday spending is predicted to surpass pre-pandemic levels.
- Seventy-two percent of shoppers expect higher prices and will account for inflation by buying fewer gifts, spending more on gift cards and seeking markdowns. Shoppers plan to spend $300 on gift cards this year, up from $217 last year, per the report.
- Seventeen percent of respondents said they have student loans to repay this fall. For those starting to repay student loans, nearly half are cutting back on holiday expenditures (48%), cutting back their non-holiday spending (37%) and curbing their travel expenses (28%), according to the report.
Dive Insight:
Deloitte’s survey suggests that consumers across income levels plan to spend more on gifts this holiday season despite ongoing inflation concerns, but some groups will see higher spending growth than others.
Shoppers earning less than $50,000 expect their holiday spending to increase 11% year over year from $671 in 2022 to $742 this year. Meanwhile, shoppers earning between $100,000 and $199,000 plan to increase their holiday budget by a mere 2% year over year from $2,134 to $2,167 this year, according to the report.
Some middle- and higher-income shoppers, on the other hand, report increasing their budgets by much more. Consumers earning between $50,000 and $99,000 report an expected 26% increase in their expected holiday spending. Shoppers earning more than $200,000 expect their holiday spending to increase 22% year over year from $3,213 to $3,922, according to the report.
“Although inflation shows signs of moderating, consumers have come to expect higher prices and are adjusting their holiday spending accordingly,” Nick Handrinos, vice chairman and U.S. retail, wholesale and distribution and consumer products leader at Deloitte, said in a statement. “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.”
Deloitte’s survey adds to previous research indicating that consumers’ holiday budgets would remain the same or increase. A Shopify and Gallup poll released this month found that 74% of shoppers plan to spend the same or more on gifts this holiday season.
The increase in consumers’ holiday budgets could result in higher retail sales this holiday season. In September, Deloitte released another report predicting that retail sales will increase between 3.5% and 4.6% from last year. The report noted that e-commerce sales could rise between 10.3% and 12.8% year-over-year.
While Deloitte’s report details how consumers are adjusting their spending for student loans and inflation concerns, other research suggests that consumers may turn to buy now, pay later platforms to stretch their budgets. A survey from Square and Afterpay found that 40% of buy now, pay later customers are using the service to manage their budget. Plus, 21% of shoppers overall and 35% of millennial respondents said they are open to using BNPL to extend their holiday budget.
