Why a new survey expects shoppers to spend more this holiday season

Posted by Admin October 15, 2024 Shopping

Holiday spe nding is expected to grow this year, up between 2.5% and 3.5% over last year, according to the National Retail Federation.

Consumers are expected to spend between $979.5 billion and $989 billion in total holiday spending in November and December, compared with $955.6 billion during the same timeframe last year, the trade group for the retail industry said during it’s annual 2024 holiday sales forecast call.

“Overall, the economy has been in a good place this year operating with solid footing, and the consumer economy and the retail industry certainly continue to benefit from that strength,” said NRF President and CEO Matthew Shay.

“When it comes to the holiday season, we know there are a number of holidays and family events and things that Americans prioritize and save for all year long,” he said. “These are important emotional connections and that always creates an extra bit of demand because people have prepared for this, saved for this and are looking forward to this.”

Holiday shopping will be both in-store and online

Shay said consumers have become “agnostic” when it comes to how they get their goods – whether in-store or online – since so many retailers have made the process “seamless.”

But the NRF also said online shopping is expected to be a primary contributor to overall retail sales growth. Online and other non-store sales, which are included in the total, are expected to increase between 8% and 9%, to a total of between $295.1 billion and $297.9 billion. That’s up from $273.3 billion last year. By comparison, last year non-store sales rose 10.7% over 2022.

This holiday season is shorter than last year’s, with six fewer days between Thanksgiving and Christmas, totaling 26 days, said Shay.

But Shay said he doesn’t think that will affect consumers.

“Black Friday has lost some of its impact on the official shopping season,” he said. “We know consumers begin their shopping earlier. We know retailers provide values and deals earlier than ever.”

Contributing factors that could affect the holiday shopping season include the economic impact of Hurricanes Helene and Milton, as retailers work to get stores open, especially in North Carolina, and as consumers impacted by the hurricanes have to prioritize spending on essentials, said Jack Kleinhenz, chief economist for the NRF.

The NRF also expects seasonal hiring to be flat as retailers have increased workers throughout the year, said Shay. the NRF expects retailers to hire between 400,000 and 500,000 seasonal workers this year. That compares with 509,000 seasonal hires last year.

Some holiday shoppers looking for ‘experiences’

This week, Deloitte also released its holiday survey of shoppers.

“Consumers told us they feel more optimistic about the economy and plan to spend more this holiday season than they did last year, but spending will look a bit different, driven by ‘doing and décor,’” Brian McCarthy, a principal at Deloitte Consulting LLP, told USA TODAY. “We expect consumers to allocate more of their budgets to non-gift purchases such as décor, holiday decoration and party apparel, as well as experiences, including travel, hosting gatherings, or attending holiday concerts and activities. Essentially, more holiday spending this year will focus on the parts of the season that bring people together.”

Here are some insights from the survey:

◾ Consumers surveyed by Deloitte said they plan to spend an average of $1,778 this holiday season, up 8% year-over-year. The increased spending is driven by an improved economic outlook and a shift to categories that emphasize the spirit of the season, such as experiences (up 16% year-over-year) and non-gift items, including décor and party apparel (up 9% year-over-year). While retail spending still accounts for 59% of the average expected holiday spend, consumers surveyed said they plan to spend $536 on gifts, $507 on non-gift purchases and $735 on experiences.

◾ Among consumers surveyed, 7 in 10 expect higher prices. Many plan to adjust spending by cutting back on self-gifting (32% compared to 48% in 2023) and by shopping at least one promotional event (78% versus 61% in 2023) this season.

◾ Deals may win over brand loyalty (Those looking for deals may challenge loyalty –) with 62% saying they will shift brands if the preferred brand is too expensive, and 48% saying they will shop at more affordable retailers.

◾ Most holiday spending is expected to occur in late November despite heightened interest in October promotional events.

◾ Consumers are planning to spend an average of $261 on hosting guests this season, and 70% would spend more on items or services to make hosting the event more convenient.

Holiday shopping: Consumers are expected to spend more this holiday season

Elections are affecting holiday shopping

During presidential election years, holiday shopping can take a slight hit and start later, Kelly Pedersen, retail consulting leader at PwC told USA TODAY.

“People get a slow start because they’re very distracted in the election and those couple of weeks tend to kind of delay the holiday shopping in a big way,” Pedersen said. Some early birds may start early, but many will delay until Black Friday.

Retailers also don’t advertise their holiday shopping specials as much during the election seasons since political ads take up the bulk of the air time, he said.

PwC, a professional advisory firm, is forecasting that overall holiday spending will surge to an average of $1,638 per shopper, a record high. That’s an increase of 7% from 2023, a 15% increase from 2022 and a 38% increase from its first holiday outlook report in 2015.

The upward trend, however, PwC says, “masks a shift in behavior among consumers, who are now moreselective in their spending: 85% are considering cutbacks over the next six months, primarily innonessential categories like dining out, clothing and luxury items.”

Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at blinfisher@USATODAY.com or follow her on X, Facebook, or Instagram @blinfisher. Sign up for our free The Daily Money newsletter, which will include consumer news on Fridays, here.