With the holidays just around the corner and inflation still strong, many consumers are getting an early start on their shopping this year.
With general merchandise prices up about 10%, shoppers are likely to shop less and give fewer gifts, while spending about the same as they did last year combined. That’s an average of $1,455 per household in 2022, according to Deloitte. Holiday Retail Survey.
Americans are expected to buy an average of nine gifts, up from 16 last year, and forego non-gift purchases such as holiday decor.
“Consumers will spend as much as last season, but they are limiting the people they spend on. They only have a certain amount of money, so they have to strengthen the list of who they are buying gifts for. ” said Howard Dworkin, chairman of Debt.com. “Because of the higher prices, their dollars won’t go as far as they did last year.”
Inflation is also pushing more people to choose gift cards as gifts to spread their holiday budget more easily.
“People are aware of inflationary challenges and struggles, and as a result they are letting the receiver decide what to do with the money,” Deloitte Insights retail analyst Rod Sides told CBS MoneyWatch.
More shoppers than usual started looking for Christmas gifts in October amid concerns that supplies will be limited and that popular items may rise in price closer to the holidays.
“Consumers’ biggest fear right now is not getting their hands on the perfect gift, so they’re going to buy it right now, whether it’s on sale or not. They are afraid that if they wait, it may not be available,” Dworkin. said. “Because of their limited supply, retailers are likely to keep prices the same without discounts to move items.”
Let’s go back to the shops
Habits formed during the pandemic, such as consumers shifting most of their spending online rather than in-store, will continue this year. But online spending is expected to grow only a modest 2.5% this year, compared with 8% growth in 2021, according to Adobe.
“It’s more muted, but there’s something to be said for the continued resilience of online spending and the persistence that has allowed spending to stay at these levels,” said Adobe Digital Insights analyst Vivek Pandya.
Big discounts on personal electronics like computers will also help boost spending, according to Adobe.
“Retailers in some sectors are trying to get rid of excess supply. Because there were shortages and shortages during the pandemic, they now have an oversupply of some products,” he said.
At this stage of the pandemic, consumers are more comfortable going into stores, and Adobe expects more people to buy clothes in brick-and-mortar stores than online, which will reduce spending on clothing online by nearly 7%.
“A lot of consumers like trying on clothes and definitely feel a lot more comfortable in stores than they did at this time a couple of years ago,” Pandya said. “It helps increase the momentum of categories like apparel in stores, and what that means for online spending on a category like apparel is going to go down.”
I will travel for hugs
Lower-income consumers are expected to reduce overall spending this year in retail categories and on travel. This led to an 11 percentage point drop in travel spending among the broader US population, from 42% of Americans who said they intended to travel last year to 31% in 2022, according to Deloitte.
Now that most of the COVID-19 restrictions have been lifted, more affluent consumers are looking to travel.
“Sweaters are nice, but during the holiday season, what people really want is the warm embrace of loved ones, and they’re taking to the roads and the skies to make that happen this holiday season,” said Mike Daher, vice chairman of transportation at Deloitte.
“I expect airports and hotels to be very busy this holiday season, so what will happen is that higher-income households will drive demand for travel, while lower-income households will choose to stay at home,” he added.