Holiday spending will increase in 2021, but consumers are concerned about the prices

Deloitte presented the results of the 36th annual holiday retail survey. As we are heading towards the second holiday season during the pandemic, the question on everyone’s mind is will the Xmas holidays and shopping ever return to normal? Some trends seem to be heading that way.

This year, Deloitte surveyed over 4,000 American consumers and 30 executives of the largest US retail companies. Below are key findings of the survey.

• Consumer sentiment is stabilizing amid waning pandemic anxiety. An average holiday budget is expected to increase by 5% from 2020. Retail executives are also optimistic about the holiday sales – 7 out of 10 executives expect consumers to spend more this year as compared to the previous year.
• Holiday budget is largely driven by high-income groups as they expect to spend 15% more as compared to the last year. At the same time, low-income consumers plan to spend 22% less than in 2020.
• The average shopping duration is expected to extend to more than six weeks. This is mainly due to the fact that 75% of consumers are concerned about stockouts and shipping delays, thus motivating them to start their shopping earlier.
• Most consumers expect higher prices this holiday season due to inflation, hitting lower-income groups especially hard. Therefore, they will be buying less during the holiday season shopping.
• The trend towards online shopping will continue. However, as health and safety anxiety decreases, some shoppers will return to browsing physical stores. According to forecasts, the share of in-store spending is expected to rise to 33% in 2021, although this is still below the 36% seen in 2020.
• Consumers are ready to spend money on entertainment and travel. The growth in this segment is expected to reach 15% in 2021 as compared to 2020.

“We can already see a decrease in anxiety around health and safety that will stimulate the overall average spend. However, holiday shopping is not going to bounce back to the pre-pandemic levels just yet,” said Oleksandr Yampolskyi, Director, Retail and Wholesale Group Leader at Deloitte Ukraine.

He believes that retailers should offer promotions early, to both the in-store and online shoppers, as holiday shopping will start earlier this year. This will allow them to experience not just a robust holiday season, but position them well for continued sales in the upcoming year.

“Perhaps the most sobering fact about the holiday shopping is that low-income groups continue to suffer. For example, their average holiday spending has decreased almost twofold in the last two years, “said Oleksandr Yampolskyi.

Read the full version of the survey to learn more about how retailers are preparing for the holiday season sales in response to declining pandemic anxiety and find out about the preparations for the holiday shopping season.

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