Holiday spending by wealthier consumers predicted to decline, according to a new report
Holiday Spending Patterns Shift Amidst Inflation
Inflation is causing a significant change in holiday spending habits, particularly for low-income and high-income consumers, according to a recent report.
Low-income consumers are feeling the effects of inflation more acutely, leading them to cut back on discretionary spending to afford holiday purchases. Many are prioritizing essentials while trying to maintain holiday traditions. For instance, 82% of consumers overall say they will try to save on groceries and essentials to cover holiday expenses. This behavior is likely stronger among lower-income groups who must prioritize.
High-income consumers, on the other hand, are more likely to maintain or even increase holiday spending. Among shoppers aged 35-54, 22% plan to spend over $1,000, indicating a segment of consumers with discretionary income willing to spend more to maintain gifting levels or holiday experiences.
The "middle" spending range ($100-$1,000) is shrinking, indicating an increased polarization where higher-income consumers sustain or raise budget levels while lower-income consumers either reduce spending or shift to lower price brackets. High-income shoppers tend to be more strategic but less constrained by budget limitations, often focusing on purchasing fewer but higher-impact or more meaningful gifts.
The preference for same-day or next-day delivery from a retailer has increased by 5 percentage points over 2021, with more than half of consumers preferring this option this year. The electronics and accessories category will see a 25% decrease in spending from higher-income shoppers, but low-income shoppers plan to increase spending in this category by 28%.
The expectations for retailers to provide a variety of delivery options are high, according to Deloitte. The preference for services like buy online, pick up in store and curbside pickup has increased among respondents compared to standard delivery this year. Fifty-six percent of Gen Z consumers plan to buy holiday gifts through social media channels.
Target and Amazon have started deals earlier than ever before in October, and consumers plan to purchase nine gifts this year, compared to 16 in 2021. The survey shows a decrease in average spending across all categories, including clothing and toys. Higher-income consumers plan to decrease their spending on non-gift purchases this holiday season by 23%. The "gift card and other" category sees a 7% increase in holiday budgets according to the report.
Overall holiday spend is expected to be on par with 2021 at $1,455 per consumer. Thirty-four percent of consumers plan to use social media for holiday shopping, compared to 28% in 2021. Thirty-seven percent of U.S. households report a worse financial outlook compared to last year.
This nuanced understanding is supported by recent research highlighting consumers’ strategic and value-first shopping mentality amidst inflation, recession fears, and tariff-induced price pressures entering the 2025 holiday season. The resulting market shift leads to a fragmented consumer landscape during holiday seasons marked by inflation and economic uncertainty.
- Amidst inflation, AI-powered budgeting tools could prove useful for low-income consumers in managing their holiday expenses, as they seek to prioritize essentials and maintain traditions while cutting back on discretionary spending.
- In the personal-finance sphere, it's interesting to note that while lower-income consumers are reluctant to increase travel spending due to inflation, high-income consumers might continue or even increase their holiday travel plans, given their).
- As inflation and economic uncertainty persist, finance and research institutions could examine the impact of these trends on different sectors, such as retail, travel, and finance, to gain insights that could inform future financial strategy and policy decisions.
