As the holiday season rolls in, the majority of Americans have tightened their belts, preparing for a leaner festive period. A report from Redfin details that 28% of consumers are reducing their decorating budget, with 26% also shaving expenses off gift purchases, according to KUTV. The survey points to a common desire to save money, cited by over half of the respondents, with 44% concerned by the current economic uncertainty. Some of the populace, however, are keeping their holiday spending on par with their monthly housing costs, displaying a stark contrast in consumer confidence and financial disposition.
Yet, despite this widespread budget consciousness, debt remains an integral part of the holiday equation. According to Money, nearly 50% of celebrants planning to spend on gifts and travel anticipate taking on debt, and a staggering 79% expect to charge it to credit cards. Over half will not pay the full balance post-holidays, and some projects will have over six months of debt repayments. The introduction of flexible payment options, such as buy now, pay later services, further complicates this landscape.
There's a little hope shining through the e-commerce sector, though. Deloitte's analysis projects a 7% to 9% growth in online sales this season, totaling an estimated $305 billion to $310.7 billion. "Our forecast anticipates that e-commerce sales will stay strong as consumers keep leveraging online deals to stretch their spending power," Natalie Martini of Deloitte told Forbes. This growth stands in stark contrast against the backdrop of a conservative overall retail growth forecast of 2.9% to 3.4%, as posited by Deloitte and confirmed by the restrained anticipations from other analysts like Bain and PwC.
The squeeze on holiday budgets is not distributed evenly among different demographics. PwC's survey suggested that Gen Z shoppers expected to cut back their spending by 23%, an effect of a challenging job market and slimmer savings. On the other end, baby boomers are bucking the trend, planning to spend 5% more. Millennials stand in the middle, maintaining last year's spending levels. Yet across generations, the hunt for value is universal with 78% looking for cheaper alternatives and 53% assert prices increases will likely impact their holiday purchases, as per PwC findings.
