Retail experts anticipate a decline in consumer spending during the upcoming holiday season, primarily due to rising economic pressures. According to the National Retail Federation, Americans plan to spend approximately $890.49 per person on gifts, food, and decorations this year. This figure marks a decrease from last year’s record of $901.99 per person.
The shift in consumer behavior is influenced by various factors, including inflation and tariffs, which have exerted significant pressure on household budgets. The largest portion of holiday spending is expected to be allocated for gifts, with more than $627.93 earmarked for presents. Insights from Bank of America highlight a disparity in spending habits, indicating that higher-income consumers are likely to make more purchases compared to their lower-income counterparts.
As the economic landscape shifts, lower-income shoppers are adjusting their strategies. They are expected to start their holiday shopping earlier than usual in order to manage their expenses throughout the season. Mary Hines Droesch, head of consumer and small business products and analytics at Bank of America, noted, “A lot of the drivers of that is because of the need to spread out their expenses over several months.” She added that concerns about rising prices due to tariffs are also influencing shopping timelines.
Amid these challenges, consumers are increasingly seeking bargains. The ongoing government shutdown, coupled with inflationary pressures, has made shoppers more keen on finding deals. Droesch stated, “This year, they are prioritizing big box retailers and dollar stores while having less interest in outlet stores and e-commerce sites.”
The report also highlights the growing role of technology in shopping habits. Half of the respondents indicated that they plan to use artificial intelligence tools during their holiday shopping, reflecting a trend toward tech-savvy consumerism.
In an effort to attract early shoppers, retailers such as Nordstrom and Wayfair are launching pre-Black Friday promotions. These deals include discounts on cookware and Christmas trees, aiming to alleviate the financial burden of holiday spending. Droesch emphasized that popular categories this year will include electronics, clothing, and gift cards, which provide recipients with flexibility in their choices.
The younger generation, particularly Gen Z, is showing a preference for affordable and pre-owned items. Droesch pointed out that these consumers are inclined towards alternatives that resemble higher-priced branded products but come at a lower cost, thereby helping them maintain a manageable holiday budget.
As the holiday season approaches, grocery stores are also responding to consumer needs with seasonal savings on Thanksgiving essentials. Shoppers are looking for ways to celebrate without overspending, and retailers are responding with promotional offers aimed at helping families feed a crowd for less.
In summary, the 2023 holiday season is set to be marked by cautious spending, with consumers prioritizing value and affordability amidst economic uncertainties. As shoppers navigate their budgets, the choice of retailers and the use of technology will play significant roles in their purchasing decisions.
