US – Holiday spending will surpass pre-pandemic levels for the first time this year – study

This year, holiday spending will exceed pre-pandemic levels for the first time, increasing by 10% compared to 2019 and by 14% compared to 2022, as 72% of consumers expect higher prices for products in the food and beverage (86%), clothing and accessories (82%), electronics (80%), home goods (72%), toys (71%) and personal care (70%) categories, according to the Deloitte Holiday Retail Survey 2023. At the same time, 56% of retailers expect one digit prices rise, and 74% are counting on an increase in holiday sales.

The study shows that the average budget allocated by consumers has risen to $1,652 in the context of increased inflation, but the majority of the total holiday spending (68%) will be made by a small group of consumers (27%), who will allocate higher amounts, of at least $2,146 for the purchase of ten gifts, compared to the rest of the consumers, who will buy eight gifts.

„The most recent Eurobarometer shows that the majority of the EU member states citizens have felt a decrease in their standard of living, but it also indicates a slight return of optimism fuelled by the decrease in inflation at the EU level from 10.9% in 2022 to 4.9% in September 2023. Unfortunately, Romania stands out with the second highest annual inflation rate among the member states, of 9.2% in September, a month in which, according to the INS, prices continued to rise for both food and non-food, as well as for services. In fact, the Deloitte study suggests that the level of spending for holiday shopping has increased mainly due to the increase in prices, an aspect that is expected to reflect in the consumption habits of Romanians,” said Raluca Bâldea – Tax Partner, Deloitte Romania, and the leader of the retail and consumer goods industry.

Online purchases saw new highs during the pandemic, but this year will remain at the 2022 level while consumers are increasingly getting back into stores. Thus, 63% of respondents plan to make online purchases, 37% will opt for offline shopping, and 28% will purchase online, but will pick up the product in the physical store. The ability to interact with the product (44%), ensuring product quality (39%) and avoiding shipping costs (28%) are the top reasons of consumers who choose to spend more offline.

The product categories with the biggest price increases will lose ground this year as consumers choose to offer vouchers as gifts. The average amount shoppers plan to spend on gift card purchases is $300, up from $217 in 2022.

In addition, the study points out that 75% of respondents are tempted to buy gifts for themselves. If the budget becomes too constrained, 53% say they will prioritize others and will cut back on self-gifting. On the other hand, retailers that can appeal to the needs and motivations of self-gifters will be able to generate add-on sales this year. Practical gifts (51%), those that satisfy one’s own passions or hobbies (42%), as well as those that offer moments of relaxation (39%) or have long-lasting use (33%) respond to the main motivating factors.

Similar to last year, only 34% of survey respondents plan to use social media for holiday shopping. They will, however, use this channel to read product reviews (20%), browse products and gift ideas (19%), discover promotions (18%) or visit retailers’ pages (14%).

The preference for sustainable gifts has increased compared to last year, the study also shows, especially among younger consumers such as Gen Z and Millennials, with 55% of them saying that they prefer this type of products. Deloitte’s analysis also shows that a consumer who chooses sustainable gifts spends on average 29% more than those who do not take this criterion into account.

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The Deloitte 2023 Holiday Retail Survey was conducted among over 4,300 US consumers and 43 executives from retail companies, among which more than 93% have annual revenues of more than one billion dollars.