Inflation will likely curb US holiday shopping habits: Deloitte

Low-income earners plan to spend 25 per cent more than last year, while high-income earners plan to cut back 7 per cent.

As consumers aim to keep the holidays festive, they will likely pull back on non-gift purchases (down by 12 per cent YoY), and shift spending to experiences (up by 7 per cent YoY), a Deloitte press release said.

Inflation is taking its toll for the second consecutive holiday season in a row. More than a third (37 per cent) of American households say their financial situation is worse than last year, and 41 per cent expect the economy to weaken next year, compared with 33 per cent in 2021.

After pulling back last year, lower-income groups (those making less than $50,000 per year) plan to spend an average of $671 this holiday season, an increase of 25 per cent YoY and similar to 2019 levels.

Conversely, spending by higher-income earners (those making $100,000 or more per year) is expected to decline by 7 per cent YoY to an average of $2,438 as they pull back on categories like electronics.

Overall, consumers plan to maintain spending levels year-over-year by prioritizing shared experiences and cutting back on the number of gifts purchased.

US retail executives are more optimistic, with 77 per cent of them expecting holiday sales to increase YoY. Three-fifths of retailers surveyed said their companies will start holiday promotions at least one to two weeks earlier than last year.

With pandemic anxieties waning, US consumers continue to warm up to in-store shopping but are not ready to give up the convenience of shopping online. This preference for digital is also driving increased interest in social media and advanced technologies for holiday purchases, Deloitte found.

The share of in-store spending is expected to rise to 35 per cent this year (up from 33 per cent in 2021), which is nearly on par with the 36 per cent seen in 2019.

Online continues to be a holiday shopping mainstay, holding steady with a 63 per cent share. Further, the use of smartphones for online holiday shopping is steadily rising, from 52 per cent in 2019 to 56 per cent in 2022.

While empty shelves and shipping delays were frequent in the last holiday season, retailers are more confident about inventory levels this time. However, amid inflation, brand loyalty may be harder to capture as lower prices and better availability will likely lure shoppers away from their standby brands and retailers, the Deloitte survey found.

More than three-quarters of shoppers (77 per cent) expect stockouts this season. However, retail executives are more optimistic, with 60 per cent being comfortable with the volume of holiday merchandise ordered, and all anticipating receiving their holiday inventory on time compared to 57 per cent who reported the same in 2021.

Fibre2Fashion News Desk (DS)