Consumers will be spending less this holiday season.
According to a new survey from FTI Consulting, consumers are spending about 4% less this holiday season overall than last year. Thirty-three percent of the survey´s respondents said they will be spending somewhat or significantly less than last year, while only 15% are spending more. Almost a third (32%) are spending about the same, according to survey findings.
FTI Consulting is a business advisory firm headquartered in Washington, D.C., United States. FTI is one of the largest financial consulting firms in the world and consistently ranks as one of the top global management consulting firms.
The report also found that consumers had already completed 39% of their holiday shopping when the survey was conducted in early November.
Gen Z consumers were the largest group to complete holiday shopping (46%), followed by Gen X (42%), millennials (35%), and baby boomers (33%).
When it comes to promotions, 26% of consumers said they have a price in mind for desired items, but they don’t look for a sale. However, a quarter of respondents wait for at least 40% off and 17% of consumers said they’re waiting for sales of at least 60% off.
FTI Consulting’s findings suggest that consumers could spend less this year than they have in previous holiday seasons.
Echoing other findings of the 2020 holiday shopping season, slightly more than 80% of FTI Consulting survey respondents said they were going to shop more online this year compared to last year, but consumers are planning to spend a bit less than before.
Research from Adobe points to increases in Black Friday and Cyber Monday online shopping, but projections of how the overall holiday sales will compare to previous years have varied.
Though the International Council of Shopping Centers projected a 1.9% growth in holiday sales, the NRF predicted that the holiday sales growth could range between 3.6% and 5.2%.
TI Consulting also found that the reasoning behind shopping via e-commerce had little to do with health or safety reasons connected to COVID-19.
Instead, respondents pointed to “convenience, best prices, and free shipping” far more frequently. That, in turn, may mean that the uptick in online sales “will stick once the pandemic passes,” according to the report.
With more consumers holding out for deeper discounts, FTI Consulting’s survey also notes the diminished importance of shopping events like Black Friday and Cyber Monday, because retailers have spread out their discounts in preparation for high shipping volumes.
Per the survey, 49% of respondents purchased holiday gifts during Amazon’s Prime Day event. Those who took part in the event completed more than half of their intended holiday spending that day. Following Amazon’s lead, other retailers, including Mediamarket, El Corte Inglés, Walmart, Best Buy, and others depending on the country you live in, also rolled out similar shopping events ahead of the holidays.
Consumers plan on buying fewer gifts and spending less this holiday season, with an 18 percent reduction in their average budget from last year, as a KPMG LLP survey found. Forty-one percent of consumers also said that they are not planning on going to Black Friday sales in person.
Faced with considerable uncertainty and reduced household income, consumers are spending less this holiday season, focusing on essential purchases for the home and gifts for close family members.
Retail customers are forming new shopping habits, which are expected to continue into 2021 and beyond.
Also, 60 percent of consumers plan to give to the same number of people this holiday season, while 36 percent will give to fewer people, according to KPMG’s 2020 holiday shopping report, “Season of Reckoning: 2020 COVID-19 Consumer Pulse/Holiday Report.”
Consumers also indicated that Black Friday and other significant retailer events will look different this year, with fewer in-store shoppers and 41 percent saying that Black Friday was their most important shopping event, compared to Cyber Monday or Prime Day.
In-store retailers hoping for a holiday reprieve may be disappointed.
The migration to online continues across nearly all retail segments.
Holiday spending: smaller gift budgets, enduring traditions
- Holiday gift spend on the family such as parents, children, and significant others, is expected to experience the smallest decline (2% to 5%); holiday gift spend on friends, coworkers, and school children are expected to experience the largest decline (more than 20%).
- Categories where respondents expect the greatest declines are in gift cards (14% decline), clothing and accessories (27% decline), and electronics (16% decline).
- All product categories are expected to be bought more from online platforms in comparison to last year — for example, there may be a 25 percent increase in online spending on clothing and accessories, a 19 percent increase on electronics, and a 14 percent increase in computer and hardware.