A new report from Deloitte is forecasting that holiday spending this year will surpass pre-pandemic levels for the first time.  Consumers surveyed for the report plan to spend an average of $1,652 during the shopping season—a 14 percent year-over-year increase, though a modest four-year CAGR of 2.5 percent reflecting a normalization of trends.

The Deloitte survey reflects an upbeat assessment of 2023 holiday spending versus its annual holiday retail forecast (see SGB Media’s coverage here) released in mid-September. In it, the worldwide professional services network, headquartered in London, forecasted U.S. holiday season sales would grow 3.5 percent to 4.6 percent between November and January, slowing from the 7.6 percent increase tallied in 2022. The moderating growth, it said, reflected less inflation but also weaker consumer spending.

Deloitte’s 2023 Holiday Retail Survey, based on responses from 4,330 consumers fielded between August 30 and September 8, found that all income groups plan to spend more this year, with the middle-income group (those respondents making $50,000 to $99,999) with the most significant gains, intending to spend 26 percent more year-over-year.

Other findings from the 2023 Holiday Survey produced by Deloitte include:

  • Nearly all respondents (95 percent) plan to shop this holiday season, up from 92 percent in 2022 and 88 percent in 2021.
  • Respondents said non-gift purchases (+25 percent YoY) are a priority and include holiday decorations, furnishings and non-gift apparel.
  • Seven in 10 (72 percent) of surveyed respondents said they expect higher prices, similar to 2022, despite moderating inflation, particularly in key categories, including food and beverage (86 percent), clothing and accessories (82 percent) and electronics and accessories (80 percent).
  • Respondents said they were less confident about staying within budget (57 percent in 2023 versus 63 percent in 2022) during the holiday shopping season and plan to modify their behavior accordingly—purchase an average of eight gifts compared to nine in 2022, with 54 percent of respondents planning to add items to their lists or online shopping cart by waiting for deals, up from 48 percent last year.
  • Gift cards gained ground on Other gift categories perceived as having higher prices, including apparel, food and beverage—the average respondent noted they plan to spend $300 on gift cards, up from $217 in 2022. Deloitte pointed out in its report that respondents surveyed may see gift cards as a way to get ahead of or hedge inflation.
  • Deloitte noted that nearly 30 percent of consumers will be responsible for almost 70 percent of the holiday spending in 2023, spending an expected average of $2,146 or more. These high spenders focus on high-quality products, while other shoppers concentrate on getting deals.
  • Three-quarters (75 percent) of consumers will be tempted to gift themselves if practical or valuable; however, 53 percent of respondents said they would reduce self-gifting to preserve their budget.
  • While 17 percent of respondents have student loan payments resuming this fall, Deloitte noted the impact would likely be minimal as less than half (48 percent) responded that they plan to cut back on holiday spending, with one-third (32 percent) not expecting to change their holiday plans.
  • Surveyed respondents who prefer to shop for sustainable products spend 29 percent more on average than consumers who do not. Over one-half (55 percent) of younger shoppers plan to purchase sustainable gifts, up from 48 percent in 2022, compared with 35 percent of older respondents.

“Although inflation shows signs of moderating, consumers have come to expect higher prices and are adjusting their holiday spending accordingly. We expect to see shoppers make their lists and check them twice for deals, but a return to pre-pandemic spending levels shows promise for the season overall. Retailers can expect continued store growth as shoppers aim to maximize their budgets with their favorite retailer, presenting new opportunities to build loyalty,” sadi Nick Handrinos, vice chairman, Deloitte LLP, and U.S. retail, wholesale and distribution and consumer products leader, in a press release.

Where Consumers Will Shop This Holiday Season
Deloitte’s survey found a preference for in-store shopping returning to 2019 levels, with 37 percent of respondents’ budgets spent in-store, compared to 36 percent in 2019. Only 28 percent of respondents plan to leverage Buy Online Pay in Store (BOPIS) this holiday season, down from 35 percent in 2022. Respondents cited the top reasons for spending more in-store as the ability to interact with the product (44 percent), to ensure product quality (39 percent) and to avoid shipping costs (28 percent). 

Respondents noted that they continue to value convenience for holiday shopping, citing online-only retailers (63 percent) and mass merchants (53 percent) as the most preferred retail formats.

Eight in ten respondents who shop online said they were willing to meet a minimum purchase to earn free shipping and would spend $40 on average. Eight in ten said (79 percent) have little to no trust in retailers’ ability to use AI responsibly, with only two in ten respondents planning to use Generative AI for holiday shopping, primarily to look for deals.

When They Will Shop
Deloitte noted in its report that inflation-wary consumers intend to make the most of promotional shopping events and expect to hold onto traditional timing to stretch their budgets. The promotional timing is critical as consumers intend to wrap up their shopping quickly.

Holiday lists are shorter this year (eight gifts versus nine last year), causing consumers to visit fewer stores (4.2, down from 5.9 last year) and conclude their shopping faster (with an average shopping duration of 5.8 weeks versus 7.4 weeks in 2019). Although retailers are tempting 24 percent of consumers to shop during October promotional events, most spending will occur in late November and early December.

Two-thirds (66 percent) of holiday shoppers plan to shop during Thanksgiving week, versus 49 percent in 2022, as shoppers take advantage of BFCM deals to offset rising prices.

“After several years of uncertainty, shoppers return to the familiar to make their holiday celebrations shine. They plan to frequent their favorite retailers and focus their shopping during the traditional late fall period. With customers planning to shop fewer weeks, retailers have a shorter amount of time to gain consumers’ attention, highlighting the importance of the November promotional events this holiday season,” said Brian McCarthy, principal at Deloitte Consulting LLP.

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