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Wednesday, October 18, 2023

Deloitte predicts jolly holiday season

While the Federal Reserve continues to work toward bring down inflation, it seems consumers have adjusted to higher prices and are gearing up for a record-breaking holiday shopping season. That's what a new report from the consulting firm Deloitte LLP suggests.

"Although inflation shows signs of moderating, consumers have come to expect higher prices and are adjusting their holiday spending accordingly," said Nick Handrinos, Deloitte vice chairman. "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."

Nearly all consumers participating in Deloitte's study plan to participate in the year-end holiday season this year, Deloitte found. And they plan to spend, on average, $1,652, a 14 percent increase over holiday spending last year, and a 10 percent jump over 2019. This even though nearly three out of four consumers (72 percent) expect to pay higher prices.

Many respondents explained how they will navigate inflation by buying fewer gifts (eight versus nine in 2022), spending more on gift cards ($300 compared to $217 in 2022) and seeking deals on Black Friday and Cyber Monday (66 percent compared to 49 percent in 2022).

Consumers plan to shop early

Deloitte queried 4,330 consumers between late August and early September, as well as 43 retail industry executives in late June, for its 2023 Holiday Retail Survey. Here are some additional findings:

  • Nearly 30 percent of shoppers will be responsible for almost 70 percent of holiday spending this year, with an expected average spend of $2,146 or more. These high-spenders will gravitate toward high-quality products, while other shoppers will seek out great deals.
  • About two-thirds of shoppers' holiday budgets will be spent in the last two weeks of November; 78 percent of consumers plan to actively shop during those two weeks.
  • Preferences for in-store purchases will return to 2019 levels. Consumers expect to spend 37 percent of their holiday budgets at brick-and-mortar locals.
  • Loyalty counts for a lot. Seventy-six percent of consumers often or always shop at their favorite retailers.
  • Non-gift purchases will be a priority – spending on categories like holiday decorations, furnishings and non-gift apparel is expected to grow by 25 percent.
  • Three-quarters of consumers surveyed said they are tempted to purchase gifts for themselves, although most said they will not spend as much on those items as they might have in past years.

"After several years of uncertainty, shoppers return to the familiar to make their holiday celebrations shine," said Brian McCarthy, principal at Deloitte. "They plan to frequent their favorite retailers and focus their shopping during the traditional late fall period." That leaves fewer weeks for retailers to garner consumers' attention, he added, highlighting the importance of November promotional events to kick off the holiday season. end of article

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