NRF expects above-average spending on gifts this holiday
According to a study carried out by the National Retail Federation (NRF) and Prosper Insights & Analytics, consumers will be spending more than usual this holiday season as they look to distract themselves from the stress of the Covid-19 pandemic.
Based on a survey of 7,660 U.S.-based consumers in October, the report found that shoppers plan to spend an average of just over $997 in the run-up to the end-of-year holidays this year. Around $650 of this total is accounted for by gift purchases, with the remainder made up of $230 in non-gift holiday purchases – such as decorations and food – and $117 in other non-gift purchases.
Overall holiday spending is therefore expected to decrease by around $51, from last year’s total of $1,048, but the majority of this decline is due to a $45 slip in intended spending on non-holiday-related purchases.
Although spending on gifts is expected to drop $9 from $659 last year, it is still predicted to be firmly above average spending of around $629 in the category over the last five years. As for spending on non-gift holiday purchases, it is actually expected to rise slightly, increasing by $3 from $227 in 2019.
According to NRF, this relatively strong performance in a year of extreme economic instability can, in part, be attributed to consumers’ desire to shift focus away from the hardships of the health crisis and onto the positivity of the holiday celebrations.
It is also a result of some consumers changing their plans due to the pandemic. 19% of survey respondents said that they would normally travel over the holidays but will be staying home this year, with 53% of these consumers saying that they were likely to spend more on holiday items because they are not traveling.
On top of this, as pointed out by NRF president and CEO Matthew Shay, consumer behavior has proved to be flexible during the pandemic.
“Consumers have demonstrated their resilience and adaptability throughout these extraordinary times,” explained Shay in a release. “Looking ahead to the holiday season, retailers will ensure that their stores are safe for both customers and employees as we all prepare to celebrate family and friends during this special time of the year.”
Unsurprisingly, online shopping is part of 60% of consumers’ holiday shopping plans, reflecting a wider trend that has seen an uptick in e-commerce sales since the start of the pandemic. 91% of those planning to shop online intend to take advantage of free shipping, while 44% plan to use buy-online-pick-up-in-store services and 16% expect to use same-day delivery.
Alongside e-commerce platforms, department stores ar popular holiday shopping destinations this year, mentioned by 45% of consumers, as are discount stores and grocery stores or supermarkets, mentioned by 43% and 42%, respectively.
And with holiday inventory and promotions starting earlier this year, survey respondents also highlighted the reasons most likely to persuade them to start making purchases before their usual shopping period.
Sales and promotions were top of the list, mentioned by 53% of consumers, followed by the desire to avoid crowds (37%) and the stress of last-minute shopping (31%). 26% of consumers were also considering shopping early because they were worried that the items they wanted to buy might sell out, while 19% thought it could take longer to receive their purchases this year due to disruption caused by the pandemic.
The report from NRF is significantly more optimistic than a similar study released by KPMG, which predicted a year-over-year decline of 18% in consumers’ holiday shopping budgets in 2020.
The reasons highlighted by KPMG for this decrease were the “considerable uncertainty and reduced household income” caused by the coronavirus crisis, with 19% of those surveyed by the firm claiming to have become more mindful of their spending due to the pandemic.
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