PwC projects 7% YoY rise in average US holiday spending in 2024

But behind this growth lies a marked gap between those ready to splurge and those tightening their budgets. PWC said in its 10^th Holiday Outlook.

Holiday shoppers told PwC they are embracing both digital innovations and traditional in-store experiences throughout the purchase journey. While home delivery remains dominant, alternatives like buy online, pick up in-store (BOPIS) are gaining ground, especially among Gen Z and millennials.

Different generations show distinct spending habits. Gen Z and millennials are leading the way in sustainable shopping, in self-gifting and in buying experiences over physical goods. In contrast, Gen X and baby boomers prefer convenience and practicality, often choosing gift cards and shopping in physical stores, a release from PwC said.

As retailers and consumers adapt to these shifting dynamics, the 2024 holiday season looks to be one of strategic spending, personalised experiences and technological integration.

Twenty-nine per cent of consumers plan to spend less compared to the 2023 season—up by 10 per cent YoY—expecting to spend just $776 this season. However, 26 per cent are ready to spend more, allocating a considerable $3,076 (a 33 per cent increase in budget from 2023).

Thirty-four per cent of US consumers earning more than $65,000 per year said they will spend more, while just 21 per cent of those earning under $65,000 said the same, suggesting that the bifurcation in spending patterns is correlated (though not entirely) with the bifurcation in income.

Millennials continue to drive overall spending, but Gen Z is rapidly flexing its economic muscle, with their holiday budgets growing by 59 per cent over the past two years.

In comparison, millennials cite a 22 per cent increase, while Gen X and baby boomers plan to reduce their budgets by 9 per cent and 6 per cent, respectively, compared to 2022.

On par with last year, 52 per cent who have not yet completed their holiday shopping plan to do so after Thanksgiving. This year, there’s a small uptick (3 percentage points) in consumers planning to shop on Black Friday.

While inflation has moderated from its 2022 peak of 8 per cent to 2.9 per cent in July 2024, the cumulative effect of price increases over recent years continues to influence spending patterns.

The result is that many consumers are approaching the 2024 holiday season cautiously, with 57 per cent describing their financial situation as strained—either unable or struggling to pay monthly bills, or able to cover them with little left for savings, holidays or extras.

US consumers are now more selective in their spending, with 85 per cent considering cutbacks over the next six months, primarily in nonessentials like dining out, clothing and luxury items.

For many, the decision to cut back on non-essential purchases appears to be a strategy to prioritise holiday spending, allowing consumers to indulge where it matters most to them. This will present a challenge for sectors whose non-holiday revenues will now face increased pressure.

Many brands already find themselves in a tricky spot. High prices have eroded consumer loyalty and shoppers are increasingly switching to private labels and store brands.

Meanwhile, price-sensitive consumers have grown more discerning and are adapting creatively. In addition to private labels and store brands, they’re increasingly trying resale/used products (45 per cent versus 38 per cent in 2023) and rental programmes (31 per cent versus 26 per cent in 2023).

This shift is particularly prominent among Gen Z and millennials and reflects a broader trend toward more sustainable and cost-effective shopping habits.

Fibre2Fashion News Desk (DS)