Nearly half of young shoppers will spend more this holiday season

Dive Brief:

While most consumers (54%) say they’re keeping their holiday spending about even with last year, young adults (18-24 years old) are likely to increase theirs, according to survey released last week by the National Retail Federation and Prosper Insights & Analytics.
Barely a quarter (24%) of consumers overall say they’ll spend more this year, but nearly half (46%) of those aged 18-24 — which includes the oldest members of Generation Z — and 39% of those aged 25-34 years old, will spend more than they did a year ago.
Many of America’s youngest consumers will also be heading to stores this season, according to a survey from Junior Achievement USA. Most (54%) plan to do much of their shopping at brick-and-mortar discount stores like Walmart and Target this holiday season. Less than half of teens (46%) said that they would be doing much of their shopping online, while about a third (34%) planned to head out to the shopping malls.

Dive Insight:

Considering the low spending power of most teens, an increase may be easier to come by, especially at a time of relatively low unemployment, when teens find it easier to find jobs.

"As Gen Z and millennials get older, their purchasing power increases, and the rise in disposable income is sure to be seen by retailers," NRF President and CEO Matthew Shay said in a statement. "This group of consumers has spent time carefully researching gifts for friends, family and themselves, and are ready to begin knocking out their shopping lists."

And because most teens don’t have credit cards, their preference for brick-and-mortar may be in part determined by how they pay. Credit cards and debit are the most popular form of payment this year, according to the NRF and Prosper, which found that 40% of shoppers will turn to some form of plastic this year, up from 39% who used credit last year and 40% who used debit cards. Just 18% plan to pay with cash and 2% will use checks. Of emerging payment methods, PayPal will be used by 36%, Apple Pay by 7%, Samsung Pay and Google Wallet by 4% each, and Venmo by 3%.

Previous research has also found that physical stores appeal to younger consumers. Millennials remain committed to brick-and-mortar, and younger members (ages 20-23) even more so: 58% of that cohort make most of their purchases offline — up five percentage points from the generational average, while 18% of older millennials (ages 32-35) make most of their purchases on mobile — up two percentage points from the generational average, according to coupon company CouponFollow. It’s not that younger shoppers aren’t online, but many are turning to their phones and computers for research rather than purchase, that research found.

When it comes to holiday gifting, clothing and accessories will be bought by 61% of consumers, the same as last year, while 59% will give gift cards, up from 56% last year, according to the NRF and Prosper. Books, music, movies or video games will be given by 44%, the same as last year, while 41% will give toys, down from 42%. The number giving food or candy is up at 34% from 31%, and 29% will give electronics, down from 30%, according to the organization’s research.

Holiday shoppers plan to buy an average of four gift cards with an average value of $45 per card, the second most-popular gift after clothing, and spending on gift cards is expected to reach $27.6 billion, up from last year’s estimated $27.5 billion, according to the NRF. The most popular gift cards include those for restaurants (36%), department stores (33%), Visa/Mastercard/American Express (24%), coffee shops (21%) and entertainment (18%).

For teens, the top gifts are clothing (56%), followed by gift cards (45%), accessories, such as hats and shoes (44%), video games (42%), small electronics (37%), toys (29%), jewelry (29%), music (22%), and sporting goods/apparel (20%), according to Junior Achievement. In addition to malls and discount stores, teens are also heading to electronics or gaming stores (20%), department stores (13%), and national clothing chains (10%), but not so much small businesses, like boutiques or consignment stores, which ranked much lower (3%), according to that survey.

Proper Analytics asked 7,439 consumers about holiday shopping plans for the NRF over Oct. 31-Nov. 7. ORC International surveyed 1,000 teens and the study was conducted in early November for Junior Achievement USA.

This story is part of our ongoing coverage of the 2017 holiday shopping season. You can browse our holiday page and sign up for our holiday newsletter for more stories.