The holiday season is right around the corner. Spending during this time of year is something to prepare for and to have a budgeting plan in place. But this budget may look slightly different this year. With Coronavirus cases peaking, various industries may be thriving in their sales growth over the past few months, or some may be declining rapidly. The same goes for consumers where their finances may be in check, or there could be instances where holiday spending may not be an option this year with furloughs and layoffs.
2020 has been a challenging year. According to McKinsey, over the past few months, consumer spending has improved, and one-third of consumers have returned to “normal” activities outside of the home. Though consumers remain wary of safety during the pandemic and being mindful of current spending, most consumers plan to maintain or reduce holiday spending. Holiday shopping will be done earlier this year, and fewer gifts will be given.
According to NerdWallet, 65% of Americans say the pandemic will impact how they plan to spend and give gifts for the holidays. By fewer people traveling this year, people can spend that travel money on gifts. By traveling less, this includes 80% of Americans changing how they celebrate the holidays along with their spending. Many people plan to celebrate virtually with family instead of attending recreational events like concerts and holiday gatherings.
NPD shares the average holiday spend in 2020 will be $691 per consumer, which is less than last year’s anticipated spend, but aligning with 2018’s average anticipated spend. NPD also shares consumers will do 48% of their shopping online, and 41% of consumers will utilize free shipping for their online shopping. As digital services have increased since April during the beginning stages of COVID-19, these services will be highly used this holiday season to convenience consumers. Lastly, 78% of consumers have changed the way they shop through brand loyalty. This brand loyalty is either by switching brands or stores.
2020 has transformed the way consumers shop. As the holiday season plays out in the next month and a half, what trends will change about holiday spending? As each consumer has a different financial situation with COVID-19, each shopper is still ready to make the most of celebrating at home with loved ones, whether it’s in person or virtually.