American consumers are planning on buying seven fewer gifts this year compared to last year as inflation continues to put pressure on household budgets, according to recent survey results.
What will influence spending?
“Finances are in a precarious position as we head into the holidays – 37% of American households say their financial situation is worse than last year,” said Deloitte. According to the financial management company, household finances are “at the weakest level in a decade.”
To cut back on spending, consumers plan to purchase nine gifts this year rather than 16 in 2021. They also plan to spend less than six weeks to get gifts, compared to a little more than six weeks last year.
While shoppers expect to buy fewer gifts, they also expect to cut back on other non-essential spending to get those presents and to socialize.
Lower income consumers are planning to spend 25% more than they did last year as higher income consumers are cutting back. In particular, those high-income consumers are expected to skip purchases such as electronics and home categories. During the COVID-19 pandemic, high-income shoppers spent heavily in those categories.
Overall, “shoppers plan to spend nearly a quarter of their budget in October (versus 18% in 2021) as concerns over inflation and stockouts motivate earlier shopping,” said Deloitte. Most shoppers (74%) expect to spend more this holiday season that last holiday season and 73% think prices will be higher due to inflation.
What are consumers planning to buy, and when?
Deloitte’s survey found that the “gift cards and other” retail category is expected to increase by 7%. Around 40% of shoppers are “looking to buy sustainable holiday gifts,” and 32% plan to buy resale items to offset rising prices.
A good chunk of shoppers (38%) plan to start buying gifts earlier this year and 23% expect to spend their holiday budgets by the end of this month, compared to 18% last year. Nearly half plan to take advantage of shopping event days, with more (30%) planning to take advantage of Cyber Monday than Black Friday (29%).
Online shopping is expected to cover 63% of holiday purchases, which is on par with the two previous holiday seasons. However, in-store shopping “continues to rebound,” post pandemic. According to Deloitte, in-store shopping grew from 28% in 2020 to 35% in 2022.