Spending on the holiday season is expected to rebound to -- and even surpass -- pre-pandemic levels this year for the first time. But, surprisingly, it's not gifts that consumers will be splurging on the most in the runup to Christmas, according to a new report Tuesday from Deloitte.
The year-end months of November and December typically are dominated by shoppers scouring stores for deals and discounts on seasonal merchandise, including gifts. The two months combined are also a good barometer of the spending power of the consumer and are critical for retailers, accounting for as much as a fifth or more of their annual sales.
Heading into the festive season, households have had their guard up because of pressures on their wallets from ongoing inflation and, more recently, the resumption of student loan payments.
But the 2023 Deloitte Holiday Retail Survey, which polled 4,330 consumers between Aug. 30 and Sept. 8, found shoppers are eager to get going with their holiday shopping, and maybe even indulge on themselves.
Among the findings: Consumers are expected to spend an average of $1,652 on holiday-related purchases, up 14% from last year and surpassing an average of $1,496 they spent in 2019.
Lupine Skelly, head of retail research with Deloitte, said in an interview with CNN that three factors have likely contributed to the uptick. More consumers will be actively celebrating the holiday season (95% versus 92% in 2022 and 88% in 2021), a majority of shoppers are expecting to pay higher prices on festive products and middle-to-higher income households will be the high spenders.
The survey also found that consumers this year are prioritizing non-gift purchases.
"As many as 82% of shoppers said they plan to spend on non-gift purchases such as decorations. That's up from 77% last year. It's not quite back to the 2019 levels where it was 88%, but it is inching up this year," said Skelly.
While gift spending is still expected to grow 9% over last year, the report said people plan to buy one fewer gift versus last year. By comparison, spending on non-gift items like clothing for family, home furnishings and decorations is forecast to jump 25% this year over 2022.
"In terms of the allocation of holiday dollars, the biggest increase that we saw is in the non-gift group," said Skelly.
Elsewhere in the report, Skelly said consumers might resort to giving gift cards in product categories "where they believe they are seeing the highest price increases."
Even as retailers try to push up the start of holiday shopping into October, the report said two-thirds of holiday shoppers still plan to commence their deal-hunting the day after Thanksgiving, on Black Friday, and the following week on Cyber Monday for online bargains.
