Unwrap the Holidays: Factors Influencing Shoppers as the Season Approaches

Historic Macy’s holiday display in New York City

As we approach the most wonderful time of the year, several unpredictable elements are poised to shape holiday consumer behavior like never before. This year, shoppers are navigating a landscape impacted by inflation, volatile weather patterns, an impending presidential election, and a deal-hunting mentality that particularly emphasizes experiences and decorations over traditional gifts.

According to predictions from the National Retail Federation (NRF), total spending during the months of November and December is expected to rise between 2.5% and 3.5% compared to the previous year, hitting between $979.5 billion and $989 billion. Amid a more promising economic outlook (as noted in a recent Deloitte survey), consumers are looking to splurge an average of $1,778 during this holiday season, an 8% increase from last year.

While inflation appears to have taken a breather, the overall atmosphere is laden with uncertainty. The delicate balance between a brighter economic outlook and unpredictable external factors makes this holiday season unique.

The Growing Deal-Hunting Mentality

Shoppers are already in the festive spirit, hunting down deals well before Thanksgiving. This proactive approach is evident, as nearly 80% of consumers surveyed by Deloitte plan to engage with promotional events hosted in October and November—a remarkable increase from just 61% last year. As Stephen Rogers, managing director of Deloitte’s Consumer Industry Center, emphasizes:

“Our deal-seeking muscle has been exercised the past two years and we are just going to continue to exercise it.”

This year marks a shift; people are anticipated to spend 16% more on experiences—think lavish dinners and holiday trips—while conceding around 3% in gift spending compared to last year. Retailers that can merge product offerings with memorable experiences, perhaps suggesting items like outdoor gear for winter getaways, could find themselves thriving amidst shifting consumer priorities.

Busy holiday shoppers ready for Black Friday at Walmart

Navigating the Election Uncertainty

Adding another layer of unpredictability is the U.S. presidential election slated for November 5. Retail leaders are keenly observing its potential effects on consumer sentiment. Mark Barrocas, CEO of SharkNinja, succinctly describes the election as the biggest unknown this holiday season, remarking:

“It may be a blip and it may be nothing, and it may disrupt things for a few weeks if the news cycle is all-consuming.”

Retailers, including Walmart, are cautiously optimistic. Their internal research indicates a surge in positivity among shoppers as they prepare for the festivities. However, many corporations are attributing low sales forecasts to potential election-related distractions. Delta Air Lines purportedly expects a dip in demand around this time, with CEO Ed Bastian noting that shoppers are likely to become more conservative in their investment decisions.

Political campaign signage in rural America

Weather’s Impact on Spending Patterns

As any seasoned retailer would admit, the weather plays a vital role in steering consumer spending, directly influencing shopping habits. Historically, cooler temperatures signal the ideal time for quick winter purchases such as cozy clothes and seasonal decorations. This year, however, shoppers are faced with a conundrum. Unseasonable warmth across much of the country, aligned with the recent devastation from Hurricane Milton in Florida, has made many reluctant to jump into holiday shopping mode.

Evan Gold, from Planalytics, stresses how critical weather patterns are to sales, stating,

“There’s no external factor that influences consumers’ purchases as directly, frequently and immediately as the weather.”

Early indicators suggest consumers could be delaying purchases for gifts such as sweaters and artificial trees. However, a colder forecast for later months may help reignite holiday enthusiasm among buyers and boost retail sales significantly.

Hurricane damage caused by Hurricane Milton in Clearwater, FL

Shortened Holiday Shopping Season

This season, consumers face an additional dilemma: shoppers will have five fewer days between Thanksgiving and Christmas than last year. This abbreviated timeline may force many to adopt a more intense shopping pace, complicating logistics for both shoppers and retailers. Kohl’s Chief Marketing Officer Christie Raymond highlights this emerging reality, stating:

“We think they’re feeling more squeezed than last year.”

To streamline the shopping experience, retailers must work smarter to garner customer loyalty. This includes offering curbside pickup, rush shipping, and enhancing the availability of essential seasonal items.

In light of the tightening schedules, retailers like Kohl’s are ramping up their inventory of gifts and decorations, strategically preparing to appeal to the time-pressed consumer.

A thoughtful blend of heightened economic responses, political engagement, adverse weather conditions, and a staggeringly compressed holiday shopping calendar indicates the need for retailers to embrace a versatile approach to cater to evolving consumer demands. As we prepare to deck the halls yet again, it remains clear that shoppers are ready to embrace the festive spirit—perhaps with a more discerning eye than in years past.

Vibrant retail displays are a staple of holiday shopping

Retailers will undoubtedly need to innovate creatively to meet these changing tastes and preferences, ensuring that the 2024 holiday season is both merry for the consumers and profitable for the businesses.

Conclusion

The fundamental changes this year present a unique intersection of challenges and opportunities for retailers across the nation. The call for deeper engagement with customers, an emphasis on meaningful experiences over material gifts, and the crucial impact of external factors like climate and politics will shape not only holiday shopping patterns but potentially redefine the retail landscape for seasons to come. We can only wait and see whether the shoppers’ Christmas cheer withstands the intertwining stresses of modern life, reminding us all: it’s truly the thought that counts amid the hustle and bustle of holiday shopping.