The holiday season is a time of joy, celebration, and generosity for many people around the world. It is also a time of increased spending, as consumers look for gifts, travel, and entertainment options to make the most of the festive period. But how are consumers spending their money this year, and what are the trends and factors that influence their choices? Here are some insights from various sources that shed some light on the consumer spending pattern during the holiday season.
A season of giving and going
According to a report by PwC1, consumers will increase spending by a healthy 7% this year, allocating an average of $1,530 for gifts, travel and entertainment. The summer travel boom will continue into winter, with travel-related spending increasing a robust 12% over the 2022 holiday season. Almost 40% of consumers will spend more overall than they did last year. Those with household incomes of $120,000 or more will exceed an average of $3,000.
The report also reveals that consumers are on the hunt for deals this holiday season. Most will browse first in stores, then turn to a variety of online options to fine tune their choices and buy gifts. Some consumers, especially young male high-earning consumers in metro areas, are particularly interested in using a variety of emerging technologies such as generative AI and chatbots to help sleuth out the right gift.
Gen Z flexes its spending muscle
While millennials are still at the top of the holiday spending heap, Gen Z consumers (17-25 years old) are on the cusp of expanding theirs. They will spend $1,275, 15% more than 2022 and the widest percentage increase of any age group, according to PwC1.
Gen Z likes to browse for gift ideas in stores and on social media, and prefers social media for comparison shopping and learning about sustainable companies. Mobile payment is their preferred mode of transaction. Gen Z consumer loyalty is available for brands to cultivate, as they are more likely to join customer loyalty programs than other age groups.
Emtech brings the sparkle
From GenAI gift advice to virtual customer service interactions, a few diehard enthusiasts are embracing emerging tech retail help, according to PwC1. These consumers are willing to pay more for personalized and convenient experiences, and are more likely to shop at retailers that offer these options. They are also more likely to share their data with retailers in exchange for rewards and discounts.
Emerging tech is not only appealing to consumers, but also to retailers, who are investing in AI and GenAI to enhance their business models and offer a seamless combination of digital and physical options to consumers.
Indian consumers ready to splurge
In India, consumers have expressed a strong desire to buy more discretionary products during the festive season, according to a report by Deloitte2. The report indicates that consumers are willing to increase spend on both travel and hotel stays, as well as buy either a new or used vehicle within the next six months. Despite concerns over inflation, the planned spending over the next four weeks will see a spike across age groups in all categories. Consumers’ intent to purchase clothing, electronic and home furnishing, and recreation, entertainment and leisure, indicates a positive spending pattern triggered by the upcoming festive season.
The report also shows that Indian consumers plan to increase their discretionary spend by 30 percent in August 2022, compared with April 2022. The current wave indicates consumers surveyed were willing to travel to domestic and international flights, and spend on leisure travel in the next four weeks. The upcoming festivities and sale offers play a key role in propelling the Indian auto industry, which is expected to grow at a high pace in the next six months.
Total holiday spend grew nearly 7% in 2022
According to a report by GlobalData3, shoppers spent 8.4% more on Thanksgiving, 6.9% more during Black Friday and Cyber Week, and 6.5% more during Christmas and other purchases during the holiday season in 2022. The report attributes this growth to the pent-up demand, stimulus checks, and increased vaccination rates that boosted consumer confidence and spending power.
The report also highlights the shift in consumer behavior and preferences, as online shopping continued to dominate the holiday season, accounting for 28.6% of total holiday spend in 2022. Consumers also favored categories such as home, health and beauty, and electronics, while apparel and accessories lagged behind.
