Despite worries about inflation and higher interest rates, U.S. consumers are poised to shell out on holiday gifts—and they’re already getting started.
Nearly three-quarters of holiday shoppers (74 percent) plan to spend as much or more on gifts than they did last year, with 41 percent intent on getting started this month, according to the Shopify-Gallup Holiday Shopping Pulse, released last week. The multi-national e-commerce firm and the polling and analytics group surveyed 1,761 people in September about how and when they plan to make their purchases.
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Gen Z is leading the holiday charge, with shoppers ages 18 to 29 identified as “the most resilient spenders” in the face of economic adversity. More than one-third (37 percent) of young consumers said they plan to spend more than they did in 2022—nearly double the average across all generations.
Retailers offering holiday deals are likely to see the greatest engagement with this age group, the survey found. Almost half (48 percent) of Gen Z consumers said promotions would probably, or certainly, influence them to start spending earlier. That’s much higher than the general response across all ages. Only 28 percent said product deals would have them shopping sooner, and 39 percent plan to wait until November to start holiday shopping. Unsurprisingly, young consumers are also the most interested in shopping through social media, with 48 percent saying they plan to buy at least some of their gifts on these popular networks. Just one-third of all surveyed shoppers said the same.
Certain trends appealed to respondents across the board. Twenty-three percent of shoppers ranked the desire to patronize small and local businesses as their top reason for choosing one retailer over the next. Shopify said businesses can capitalize on this sentiment by centering promotions around Small Business Saturday on Nov. 25, the day after Black Friday. And despite the post-pandemic resurgence of physical retail, survey responses indicate that digital remains a key channel. In fact, 93 percent of consumers of all ages said they plan to buy at least some holiday purchases online, and almost half (47 percent) said they will do most of their holiday shopping there.
Holiday shopping got underway over the summer, or even earlier. Sales of holiday stockings jumped 98 percent between August and September, and wreaths increased 101 percent during the same period. Shoppers are also stocking up on fall essentials, with outerwear, scarves, coats and jackets all seeing 50 percent sales growth month over month.
A separate study from Signifyd, the e-commerce fraud protection firm, shows that online spending during the week of Thanksgiving is projected to be 4 percent higher than last year, with total season sales up 5 percent over the same period last year.
Signifyd mined transaction data from its network of thousands of merchants, projecting that a retailer’s outlook will vary based on the vertical and audience.
“I see that there is going to be some pretty modest growth, but with some real opportunity for retailers depending on their categories and how well they’re able to execute,” chief customer officer J. Bennet said. “Retailers who are able to get in front of their customers when they want to be sold to and deliver value in a beautiful experience can look forward to significant success this season.”
Notably, apparel is expected to have a “breakout” period during the Thanksgiving week, with sales jumping 10 percent over last year, according to Signifyd. Apparel retailers are slated to see year-over-year sales in the fourth quarter grow by 9 percent, followed by electronics at 8 percent. Sporting goods will also see a 5-percent bump during Q4, but health, beauty and home goods are projected to fall 5 percent compared to sales during the same period in 2022.
Signifyd’s analysis also showed that shoppers are projected to start holiday shopping this month, with e-commerce sales expected to beat last year’s October numbers by 7 percent. The company sees activity cooling off in November, with sales up 5 percent from a year ago, into December, up just 3 percent year on year.
“[The figures are] perhaps underwhelming from a year-over-year perspective when compared to the double-digit, year-over-year growth from seasons past,” Signifyd data analyst Phelim Killough said. “But we’re building off a higher foundation. We haven’t seen a decline in year-over-year sales since the onset of Covid. We’ve simply seen a slowing in growth.”
The predicted growth in holiday spending comes as September data shows consumers are still holding back due to inflation, he added. E-commerce spending grew 3 percent year over year, with September and August trends showing consumers continuing to prioritize necessities over discretionary spending. Apparel and home goods fell 3 percent and 6 percent respectively from the same period last year.
Signifyd’s Europe, Middle East and Asia research mirrored many of its findings in the U.S. market. While inflation continues to improve, “the deceleration in price hikes won’t be dramatic enough to turn merchants’ fortunes around,” Signifyd said. Digital sales will grow 3 percent over last holiday season, with a 2 percent increase during the Black Friday through Cyber Monday sales.
“In Europe, we’re going to see very similar trends to everywhere else in Western economies,” Bennett said. With high fuel and grocery prices impacting shopper decision-making, “consumers will continue to be cautious spenders throughout the holiday season, looking for the right promotions and the best value for their money,” he added.
The holiday sales season has gotten off to a solid start, according to Signifyd’s research. October sales are already 5.5 percent ahead of 2022, but they may cool considerably in the coming months. Sales could remain flat or see 0.5-percent growth during November, and rebound in December, with up to 4.6-percent year-over-year growth, Signifyd said.
