CHICAGO—Most Americans plan to alter the way they shop for holiday presents because of inflation, according to new research by Numerator. Ninety-three percent of consumers will adjust their gift shopping to account for higher prices. The top adjustments will be seeking out additional promotions and sales (49% of shoppers), purchasing less expensive gifts (43%), purchasing fewer gifts (38%) and purchasing gifts for fewer people (22%).
Additionally, nearly 3 in 5 holiday shoppers (59%) say they’re worried about their ability to afford gifts this year, and two-thirds (66%) expect inflation to have a moderate or significant impact on their holiday gift shopping.
Among the 26% of shoppers who expect to spend more on gifts this year, the top reason is that they think gifts will be more expensive (59%), followed by a need to buy more gifts (23%) or a desire to indulge more this year (15%). Among the 28% of shoppers who expect to spend less on gifts this year, the top reason is less financial flexibility because of inflation (60%), followed by a need to save money for essentials (44%) and having less discretionary spending money this year (40%).
Sixty-four percent of consumers have a budget for holiday shopping, and 51% of shoppers plan to spend over $500 on gifts, while 17% will spend over $1,000. Younger consumers are more likely to increase their holiday spend. More than one-third (36%) of millennial and Gen Z shoppers say they will spend more on gifts this year than they did last year, citing improved job situations and a desire to splurge as the main drivers. One-quarter of Gen X and 20% of boomers say they will spend more.
Numerator found that the majority of shoppers (74%) will buy their gifts online, followed closely by mass retailers (64%) and department stores (45%). Gen Z consumers are more likely to buy gifts from online small businesses (+3 points) compared to other generations, while boomers are more likely to purchase from department stores (+3 points) or club stores (+3 points).
Sixty percent of shoppers expect to purchase some sort of gift card this holiday season. The most popular gift card choices are Amazon (35%), Target (20%), restaurants (19%), Walmart (18%) and credit card style gift cards (18%). Also, experiential gifts like event tickets or travel are the only category shoppers expect to buy more of this holiday season—17% of gift buyers expect to purchase these types of gifts, up from 14% last year.
Holiday sales could reach up to $960.4 billion, according to the National Retail Federation’s holiday forecast for 2022, and consumers plan to spend $832.84 on average on gifts and holiday items such as decorations and food.
The holiday shopping season began earlier this year amid shopper concerns over inflation and product availability, and retailers have responded with early deals. Retailers have had excess inventory, while shoppers have shifted their habits.
The past two years have brought record online spending, and shoppers were willing to buy all sorts of items, which took its toll on the supply chain. In anticipation of continued spending and to get ahead of supply chain issues, companies stocked up. Then decades-high inflation hit Americans. High gasoline and food prices forced consumers to be more selective in their spending, leaving companies with more inventory than they could sell.
U.S. retail sales were up 1.3% last month over September, as shoppers spent more money on essentials such as gas and food, reports the Wall Street Journal. However, spending on discretionary items was up, including cars, furniture and dining out.
“The jump in sales showed households continued to have the resources to increase their spending despite inflation running close to a four-decade high, climbing interest rates and economic uncertainty,” wrote the Journal. “Many households built up savings earlier in the pandemic thanks to trillions of dollars in government stimulus, fewer opportunities to spend and higher wages. Jobs also remain plentiful, despite an increase in layoffs in some sectors such as tech.”
Walmart and Home Depot reported an increase in third quarter sales year over year; however, Target missed earnings in the third quarter, citing a decrease in shopper spending in recent weeks.