Photo by The Holiday Forecast: Shoppers’ Mindsets Amid Challenges and Cheer
As the holiday season approaches, the economic landscape is shaping consumer behaviors in ways that could easily tip the scales between festive cheer and holiday despair. From early spending trends to external pressures like weather and political distractions, various factors reveal insightful glimpses into what the retail landscape might look like this November and December.
Anticipation of the holiday season can be seen in store windows and shopping districts across the nation.
A Modest Uptick in Spending
According to the National Retail Federation, consumer spending during the holiday months of November and December is expected to see a rise of 2.5% to 3.5% compared to last year, amounting to a whopping range of $979.5 billion to $989 billion. While this increase seems promising, it is worth noting the moderation compared to the 3.9% spike experienced from 2022 to 2023.
Deloitte’s recent survey highlights a shift in consumer priorities, as shoppers plan to increase their budgets for decorations and experiences—but with a slight dip in gifting. With an average intended spend of $1,778 this year, up 8% from last holiday season, the indicator is hopeful, yet multifaceted.
“People are still in a better frame of mind, despite the political chatter,” said Stephen Rogers, managing director of Deloitte’s Consumer Industry Center.
The Deal-Hunting Mentality
The economic backdrop has primed shoppers to become increasingly vigilant about deals. Merely weeks before the traditional holiday shopping spree, early sales and promotions are alluring consumers to whip out their wallets earlier than usual. Nearly 80% of participants in Deloitte’s survey mentioned their intent to engage in various deal events this season, signaling that interest in bargain-hunting is likely to dominate.
Retail strategies adapt as businesses prepare for competitive sales.
NRF’s CEO, Matt Shay, anticipates a more promotional environment this holiday, predicting deals across more brands and cooking categories. Yet, while shoppers lean into the thrill of finding bargains, there’s a clear pivot in consumer preferences towards decorations and experiences rather than just gifts. A reported 16% increase in spending on experiences signals a remarkable shift but also poses challenges for retailers who thrive on gift sales.
Political Distractions and Consumer Sentiment
With the presidential election looming on November 5, the uncertainty surrounding the election could impact consumer spending. As citizens await results amidst potentially polarizing coverage, there is concern that this distraction could shift attention away from retail purchases.
“Christmas is going to come and there will be a holiday season. It’s just a matter of how many distractions there are,” mentioned SharkNinja CEO Mark Barrocas. From analysts to major retailers, many are monitoring the effects of political opinion on consumer confidence and expenditure patterns.
Political sentiment may resonate with spending trends in unexpected ways.
Weather Woes and Hurricane Fallout
Compounding the challenges are the unpredictable whims of nature. This year has seen uncharacteristically warm autumn temperatures, potentially fuelling an unenthusiastic mindset among shoppers reluctant to invest in winter wear or decorations as record hurricanes have leveled parts of Florida and North Carolina.
In tune with the 2024 holiday forecast, Evan Gold from Planalytics notes that the weather directly influences consumers’ desire to shop. Colder temperatures in November and December may rekindle the festive spirit, leading to a surge in demand for cozy sweaters and holiday decorations. However, families affected by hurricane damage may be redirected to necessities over presents.
Shorter Holiday Window
Adding urgency to the shopping spree is the fact that the period between Thanksgiving and Christmas is shorter this year, cutting down from last year’s 32 days to just 27 days. This reduction could pressure time-constrained shoppers to seek quicker delivery solutions or consider rush shipping options.
Kohl’s Chief Marketing Officer anticipates the necessity for retailers to “work harder to woo customers,” especially as lower- and middle-income shoppers signal they are feeling financially squeezed. Retailers are adjusting strategies accordingly, expanding their offerings to include not just gifts but also decorations and seasonal apparel, endeavoring to capture more holiday traffic.
Celebrating the spirit of community and togetherness ahead of the holiday season.
Conclusion
The upcoming holiday season tells a complex story—a tapestry woven from shifting consumer priorities, external pressures, and economic indicators—all swirling together in a unique mix. Retailers face a formidable task; balancing consumer demands, navigating political distractions, and responding to the unpredictable nature of weather and recent events can be overwhelming.
While the forecast suggests modest growth, the finding of holiday joy may unearth deeply personal strategies among shoppers as they seek ways to celebrate in a meaningful way. Ultimately, how each thread interlaces will create the holiday narrative of 2024, filled with both challenge and cheer.
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