2023 Holiday Shopping Insights with LSU's Dan Rice
November 17, 2023
To many, the holidays mean holiday shopping, but are the issues shoppers faced during the pandemic, like lack of supply and shipping delays, a part of Christmas past? Will inflated prices impact the seller, the customer or both? Will shoppers be spending more or less this year? As Santa finalizes his naughty and nice lists, LSU Associate Professor in Marketing and the Director of the E. J. Ourso College of Business Behavioral Research Lab, Dan Rice, shares his expertise to help you shop this holiday season.
What do you expect to see this year for holiday shopping?
The National Retail Federation (NRF) is predicting a 3-4% growth in revenues, with many shoppers planning to start shopping before November. So, we’re seeing this trend of earlier holiday shopping promotions from retailers, and that trend will likely continue. There will also likely continue to be a large number of shoppers in the Black Friday to Cyber Monday period, with 66% of shoppers planning to shop that week, up more than 15% from the plan for last year according to a Deloitte Survey. We also continue to see predictions of larger percentage growth in eCommerce than non-eCommerce holiday shopping, with the former’s growth outpacing the latter’s nearly four to one according to insider intelligence. As more and more people shop online, this should continue.
Is there anything different this year than in years past?
Perhaps the most surprising is the continued spending while there’s still some threat of recession. There’s also predicted to be a slower growth rate due to the winding down of government stimulus packages and the end of student loan deferments. These seem to be tempering predictions for some of the growth rates that we’ve seen over the last few years. Consumers are also showing a larger percentage growth for services vs. products and expecting higher prices. So, while shoppers predict they’ll spend more according to Deloitte, they also expect to buy fewer gifts to stay close to budget. Add into this the ongoing wars in the world and what has so far been an exceptionally warm fall, and patterns for certain categories of products could be drastically affected.
Over the last decade, the National Retail Federation says consumers are starting their shopping earlier. Why is that?
There are a number of factors that could influence this, but in large part it is likely driven by promotional activity from retailers. Amazon “Prime Days” have sprung up in July and October, signaling special deals for consumers not tied to a particular holiday. Promotions like these might help to move stock prior to the main holiday season and make retailers less dependent on the more traditional November to December holiday shopping period for their revenue. Of course, things like this only work if consumers will buy, and there seems to be some evolution of consumers more consistently looking for items year-round in larger numbers.
Last year, the focus was on inflation and heavier prices. Will those continue to play a part in this year’s shopping?
To some extent perhaps. Again, consumers appear to be planning on spending more but buying less in terms of number of items. Some of that inflation is likely built into the consumers’ budgets. What’s interesting here is the effects of price promotions and price focus across particular age demographics. For example, in a recent McKinsey publication, looking at the top three considerations in holiday shopping: better prices and promotions are listed in 74% of the baby boomer generation, but only 40% of Gen Z respondents. However, 42% of Gen Z’ers listed better quality, compared with only 22% of baby boomers. This means that different campaigns and positionings might have differential success depending on the generation.
In 2021, supply chain issues and shipping delays were the focus - have we rebounded from those issues?
Largely yes. Much of the supply chain issue was caused by the COVID-19 pandemic restrictions and complications. We now have mostly adequate product supply for most items. Remember too that the highest shipping months for holiday goods are typically September and October to ensure the right product is in front of the consumer at the right time. Holiday shipments have already begun to taper down, and largely retailers have gotten the stock they plan on, some of which is already in the stores. To further alleviate potential issues, some supply chains have seen small shifts in country of origins for the source product. For example, Christmas lights largely come from China, but a small increase in production from Cambodia has shown up in supply chains.
One of the impacts this has is the presence of more stock not only in full price outlets (think Macy’s and Bloomingdale’s), but also off-price retailers who buy surplus inventory from the full price stores. During the supply chain crisis, there were fewer items in total in all outlets. Retailers and manufacturers could focus on those higher price and higher margin locations, leaving precious little overstock surplus for the discount retailers. The healthy amount of stock in the discount retailers currently suggests that many of the supply chain issues are behind us.
The National Retail Federation says those celebrating the winter holidays expect to spend $875 on average on gifts, decorations, food and other key seasonal items. The amount is $42 more than consumers planned to spend in 2022 and is in line with the average holiday budget over the last five years. Why are shoppers spending more this year?
A large part of this might be inflation, or at least the perception of inflation, influencing price perceptions and the amount of planned purchases. It might not be that consumers necessarily plan to buy more items (and in fact as noted, they might plan on less), but the cost of those items being higher leads to higher planned amounts.
Is there anything else you want to add?
Always make sure to do your research on holiday (or really any) purchases, particularly major ones. Try to have some idea of what a typical selling price is for the particular product or service at which you’re looking. Just because something is advertised as a great deal doesn’t necessarily mean it is. Also, regardless of the deal level relative to retail price, think about its value to you, which also influences the value or lack thereof in a particular price.