Price remains a key factor—but not the sole criteria—for when and how consumers shop this holiday season, according to the latest EY Holiday Survey.
A survey of 13,000 global consumers, including 1,000 in the U.S., found that 47 percent of U.S. shoppers said price is the most important attribute when deciding which retailer to purchase from. As for what they plan to buy this season on sale, 61 percent said they plan to buy technology-electronics, followed by 59 percent who plan to make apparel and accessories purchases. In addition, 41 percent of U.S. consumers they won’t begin shopping for the holidays until November or December, and 61 percent indicated that what they want to buy often aren’t included in sales until then. As for the focus on price, 56 percent express concerns about ability to pay for holiday gifts, with that percentage rising to 61 percent among Gen Z consumers.
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The survey doesn’t mean that consumers will only buy apparel when its on sale. Fifty-two percent said they are willing to pay full price “for important gifts if needed.”
“Consumers are feeling increased skepticism when it comes to making purchases,” EY Americas Retail Sector Leader Mark Chambers said. “The retailers that will come out ahead are the ones that have a solid understanding of how their customer segments are behaving, and how they are making purchasing decisions, and then tailoring their strategies accordingly.”
Overall, 70 percent of U.S. consumers said they enjoy the holiday sales events, but 63 percent also said they are “skeptical about the real value” of the seasonal discounts.
Other findings include 58 percent of U.S. shoppers noting that they plan to buy their holiday gifts online. Moreover, social shopping is growing, especially among the Gen Z crowd. EY found that with social media platforms on the rise, they are expected to become significant sales channels in future years. Twenty-four percent of U.S. consumers in the survey said they plan to make purchases via shoppable social media.
“As the range of sales channels to purchase items grows, the importance of creating seamless experiences both in store and digitally is paramount,” EY Americas Consulting Retail Leader Isaac Krakovsky said, adding that retailers that can meet the demands of multiple sales channels and build experiences seamlessly across channels will be able to create both loyalty and retention of customers well past the holiday season.
And as consumers become more intentional in their spending this year, a holiday study from Splitit and Pymnts found that 38 percent of millennials plan to increase their use of pay later options for self-gifting this holiday season, which could turn the option into a powerful customer acquisition tool. In addition, 30 percent of holiday shoppers expect to use pay later more frequently during the holiday season than during the rest of the year.
Popular pay later categories for holiday gifts include apparel and accessories at nearly 60 percent, as well as luxury items such as furniture and electronics that are most often financed via credit card installments.
“Though we see a strong interest in shoppers buying for themselves using pay later plans this holiday, nearly two-thirds of consumers also plan to use flexible payment options for gifting,” Splitit CEO Nandan Sheth said. “Millennials and parents, in particular, are leveraging pay later options to justify large purchases and better manage their finances.”
The study found that nearly half of parents, at 49 percent, said pay later plans reduce the guilt of splurge purchases by spreading large expenses out over time. In addition, 62 percent want to know upfront if pay later is an available option, which is influencing their purchasing decisions on where to shop. The study found that more consumers, at 27 percent, are willing to pay full price when they can split payments into manageable chunks.
The Splitit-Pmnts study also found that credit card-linked installments are the most popular pay later option over the last 12 months at 39 percent, followed by traditional Buy Now Pay Later at 38 percent. It also concluded that because the availability of pay later plans influence where shoppers buy, the option also presents a way for “merchants to acquire new customers.”
A number of different surveys are forecasting modest retail sales gains this holiday season. The National Retail Federation (NRF), a retail trade group, predicts that holiday spending in the U.S. will grow 2.5 percent to 3.5 percent over the 2023 season, or to between $980 billion to $990 billion. Salesforce is forecasting a modest 2 percent growth. Like EY, which is predicting 3 percent growth, Salesforce also found the price sensitivity is influencing how consumers shop, with purchasing behavior largely dictated by their hunt for value.
An NRF holiday-consumer update last month found that consumers this year are “budgeting more than they have in the past. Popular categories include apparel and accessories, books, video games, and gift cards. In addition, 12 percent of consumers in an NRF survey said that they plan to shop at thrift or second-hand shops, a percentage that goes up significantly among those between ages 18 to 24.
