While 28 per cent of consumers plan to spend more than they did last year, 27 per cent plan to spend less, and 45 per cent plan to spend the same, BCG’s 2024 Holiday Outlook Survey revealed.

Several factors play a role in this modest growth outlook. On one hand, real consumption has continued to grow in the post-pandemic era, and American household incomes and balance sheets are strong relative to historical levels.

Moreover, both job growth and income growth are at similar levels to the pre-pandemic economy, BCG said in a release.

But other factors keep the cheer in check: Despite positive indicators of economic growth, however, consumer sentiment has fallen over the last two years. Ongoing geopolitical tensions, global military conflicts and the upcoming 2024 presidential election are creating an environment of split attention for US consumers.

Moreover, high inflation, even with its recent cooling, has led to peak prices for consumer staples—tightening budgets for holiday shopping and making for more intentional channel selection and deal-seeking throughout the season.

Feeling uncertain but financially stable, households may choose to play it safe this holiday season but still spend as much as, or modestly more than, they did last year.

Historical precedent suggests, however, that the election is unlikely to drive a contraction in consumer spending, no matter which candidate wins.

BCG recommend retailers to keep three things in mind: a distinct early peak in spending ahead of Black Friday & Cyber weekend is expected; Thanksgiving and Christmas could create more active media and promo competition during the peak season; and winning strategies will be multi-faceted throughout the holiday season, with the first tactics deployed in October and a highly responsive approach during peak December.

BCG feels holiday performance for consumer brands and retailers will depend on well-timed execution, recognising that shoppers have different missions across the full holiday season.

Fibre2Fashion News Desk (DS)