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October 20, 2023

Deloitte: Concerned Consumers Still Expect Higher 2023 Holiday Spend

A survey from business services firm Deloitte indicates that consumers will spend more in this year’s holiday season than they did in any since the COVID-19 pandemic.

The gain in expected holiday spend to $1,652 each represents a compound annual growth rate of just 2.5%, Deloitte pointed out, but a 14% year-over-year increase.

In a somewhat merrier holiday mood, 95% of survey respondents said they plan to celebrate, up from 92% in 2022 and 88% in 2021, reflecting a return to pre-pandemic levels. All income groups plan to spend more this year, with the middle-income group, those making $50,000 to $99,999, intending to spend 26% more year-over-year, the biggest proportional gain among earnings brackets. 

Consumers said non-gift purchases, up 25% in spending intention versus 2022, are a priority this season as they restock holiday decorations, furnishings and non-gift apparel.

When it comes to who’s purchasing, 30% of shoppers will do almost 70% of the holiday spending this year. On average the top 30% expect to spend $2,146 or more this season. The big spenders are focused on high-quality items, while other shoppers focus on getting a great deal.

However, 72% of consumers expect to confront higher prices. Survey respondents said they expect to pay more for food and beverage, at 86%; clothing and accessories, at 82%; and electronics and accessories, at 80%.To navigate inflation, consumers are cutting the number of gifts they play to buy to eight, versus nine a year ago. They also are seeking out deals, with 66% planning to shop Black Friday weekend through to Cyber Monday, versus 49% in 2022. One in three shoppers told Deloitte that they will spend their budget in the last two weeks of November, with 78% actively shopping during that period.

At the same time, fewer consumers are confident in their ability to stay within a budget, with 57% saying they feel certain they could spend as their intentions dictate versus 63% in 2022.

A worry hanging over the season, student loan repayments will have a minimal impact overall during the holidays, according to Deloitte. Of the 17% of consumers surveyed who said they will have to start making student loan payments again this fall, only 48% plan to cut back on holiday expenditures and 32% do not expect to change their holiday plans.

Three-quarters of survey respondents told Deloitte they are tempted to buy holiday gifts for themselves, mainly if it is practical or useful, and 53% say they will reduce self-gifting to preserve their budget.

Deloitte noted consumers who prefer to shop for sustainable gifts will spend 29% more on average than those who don’t. As to who is so inclined, 55% of younger shoppers plan to purchase sustainable gifts, up from 48% in 2022 and compared with 35% of older generations including GenX, Baby Boomers and Seniors.

“Although inflation shows signs of moderating, consumers have come to expect higher prices and are adjusting their holiday spending accordingly,” said Nick Handrinos, vice chairman, Deloitte LLP, and U.S. retail, wholesale and distribution and consumer products leader. “We expect to see shoppers make their lists and check them twice for deals, but a return to pre-pandemic spending levels shows promise for the season overall. Retailers can expect continued store growth as shoppers aim to maximize their budgets with their favorite retailer, presenting new opportunities to build loyalty,” 

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