Spending for the holidays will rise 6%
High-income shoppers will fuel holiday spending this year, even as less affluent consumers keep their purse strings tight.
That’s the finding of a survey released last week by consulting firm PricewaterhouseCoopers. The firm expects Americans overall to increase spending by 6 percent this season, but those with household incomes under $60,000 will cut their outlays for both gifts and entertainment as they deal with stagnant wages.
“There’s both an intent and ability for the higherend consumer to spend extra this holiday,” said Steve Barr, U.S. retail and consumer leader at PricewaterhouseCoopers. There are times when shoppers with lower income levels are the growth engine in holiday spending, he said. “But under the current scenario, it’s really not possible.”
Last year, U.S. holiday sales grew 4 percent to $658.3 billion, according to the National Retail
Federation. Online sales gains helped offset weak department-store traffic during the period, which spans the final two months of the year.
The National Retail Federation said Tuesday it expects holiday sales to increase between 3.6 and 4 percent in November and December. This forecast excludes automobiles, gasoline and restaurants, and marks the first time the company has used a range, because of the uncertainty about how recent hurricanes will impact sales.
“We all know retail is not dead or dying,” said Matthew Shay, the trade group’s CEO. “It’s certainly transforming.”
Most people will combine in-store and online purchases, with almost 90 percent planning to do some shopping in physical
stores, the survey found. Though shoppers won’t abandon brick and mortar entirely, they plan to complete half of their shopping online, citing things like slow-moving lines that deter them from stores, especially during the holidays.
“Companies are trying to ease friction points, bring tech elements into stores and combat some of the challenges of physical retail,” said Liz Dunn, a retail analyst. “A portion of our shopping will continue to shift online, and we’ll see online growth outpace that of physical stores.”
But online retailers are finding they have to step up their game to meet consumer demands, especially when it comes to delivery, the survey found.
“The e-commerce
transformation has conditioned consumers to expect or receive most things in two days,” Barr said. “Now the trends are going more toward sameday or even two-hour delivery.”
To make that happen, some retailers have shifted from “behemoth distribution centers in the heartland” to “more nimble versions” close to population centers, according to the report.
In addition to its annual holiday outlook, PricewaterhouseCoopers conducted a separate study of shoppers ages 13 to 16 to analyze their preferences.
Though members of that group most often find out about products from social media, they still enjoy the in-store shopping experience, the survey found. More than half of those shoppers choose the mall as their favorite venue for holiday shopping.
The survey said that those young shoppers are more likely to buy a product if someone they follow on social media “links to a discount, shares a positive review, or wears or uses a product.”
Barr said he attributes this year’s estimated increase in holiday spending to both economic and psychological reasons — at least for more upscale shoppers.
“It’s highly influenced by consumer confidence,” he said. “But there’s also a psychology here where folks are ready to have a breakthrough holiday and not be encumbered by the difficult times.”