Dive Brief:
- Consumers expect to spend $1,595 on average this holiday season, a 10% drop from the year prior, according to a Deloitte survey of 4,270 consumers released Wednesday.
- Most survey respondents (89%) are searching for deals, while 77% said they are trading down to lower-tier retailers and brands.
- Signaling consumers’ economic concerns, 77% anticipate higher prices on holiday items. Over half (57%) of respondents expect the economy to weaken next year, the poorest outlook since Deloitte began tracking economic sentiment in 1997, according to the survey.
Dive Insight:
Most consumers across generations and income groups plan to curtail their spending this holiday season, Deloitte’s survey suggests.
While Gen Xers anticipate spending 3% more year over year, Gen Zers are cutting their spending by 34% from last year. Millennials are expected to spend 13% less, while baby boomers will cut spending by 6% compared to last year.
After rising for two years, all surveyed income groups anticipate reducing spending. Shoppers earning $100,000 or more plan to trim their retail purchases, the survey found.
“In a climate of economic uncertainty, retailers should recognize that traditional approaches may no longer be enough,” Brian McCarthy, principal retail strategy leader at Deloitte, said in a statement. “To connect with today's value-seeking consumers, it can be helpful to rethink strategies, embrace innovation, and tailor their strategies to engage consumers across generations and income levels. Retailers who adapt to these changing dynamics will likely be better equipped to navigate the season and foster lasting customer loyalty.”
Other reports also project a decline in consumer spending this holiday season, particularly among Gen Z shoppers. Gen Z consumers expect to slash their holiday budget by nearly a quarter, a sharp contrast to last year when their average spend rose 37%, according to PwC’s holiday outlook released in September. Another PwC report released this month found that a third of Gen Z are reducing their apparel purchases.
On average, shoppers expect their holiday budgets to dip 10.2% year over year, but they plan to spend the same on gifts this year as they did last year, according to a JLL holiday survey released this month. Roughly 7 in 10 shoppers will be more prudent with their holiday shopping decisions this year in response to tariff-driven price hikes, a recent ICSC survey found.
