Inflation is affecting nearly all consumers, with 97% aware it is impacting the cost of goods and services. 88% say inflation is currently affecting or will affect their spending decisions. Consumers are purchasing fewer things and spending the same amount as last year (54%), purchasing the same number of things and spending more (32%), or purchasing more things than last year and spending more (15%).
Spending has increased the most on essentials like food, utilities, housing, and transportation. Travel is the only discretionary category where consumers are more likely to increase spending. More shoppers are looking for the best holiday deals.
Only 14% shop for holiday gifts throughout the year. 86% wait until October–December to do their holiday shopping, but may change their minds if it means stretching their dollars. 51% identified a month earlier than October as the “ideal month” for brands to begin holiday sales and promotions.
Among those who shop throughout the year, 64% do so to take advantage of discounts. Gen X (16%) and boomers (17%) are slightly more likely than Gen Z (8%) and millennials (12%) to do their holiday shopping throughout the entire year. Most consumers (61%) plan to spend the same amount on holiday shopping as last year.
Holiday shoppers prioritize deals over luxury
19% are planning on increasing their spend, while 20% are planning to decrease their spending. Price range is the top factor in purchase decisions for 70% of consumers, followed by quality at 61%.
Variety lags far behind, suggesting value is the most important factor this holiday season. Ed Hallen, chief product officer and co-founder of Klaviyo, says customers are feeling inflation and are focused on prices and deals. He recommends shoppers connect with brands to stay updated on deals, as different brands approach discounts in different ways.
Shoppers are also more likely to be influenced by social media, buying products they see on TikTok or Instagram. Due to economic uncertainty, many holiday shoppers plan to reduce their spending this year. Retailers are adjusting by offering more promotions and discounts.
Some consumers are turning to second-hand markets and making more selective purchasing decisions. Surveys show a significant portion of the population is prioritizing essentials over luxury gifts. This trend indicates a more budget-conscious approach to holiday shopping this season.
As the holiday season approaches, it remains to be seen how these factors will ultimately influence overall retail sales. However, both consumers and retailers are gearing up for a holiday season marked by financial mindfulness and strategic spending.
