Holiday Shopping Will Be (Mostly) Merry and Bright

Consumer spending is at or above pre-pandemic levels, but supply chain issues and higher prices may dull holiday sparkle.

October 26, 2021

Mall During the Christmas Shopping Season

NEW YORK—Overall spending for the 2021 holiday season appears to be bright for most, according to Deloitte’s 36th Annual Holiday Retail Survey.

As COVID-19 concerns decrease and consumer confidence increases, Americans are planning to spend close to what they did in 2019, with spending on experiences (including socializing, travel and entertainment) expected to increase 15% over 2020. Among consumers surveyed, 42% plan to take a trip this holiday season, mostly by car.

Deloitte found that consumer spending at nearly all retail subsectors has recovered and is at or above pre-pandemic levels. The share of in-store spending is expected to rise to 33% in 2021 (up from 28% in 2020), although this is still below the 36% seen in 2019. Despite some recovery to in-store spending, digital continues to see healthy gains, with online spending expected to rise to $924, up from $892 in 2020.

According to the survey, holiday spending will average $1,463 per household, up 5% from 2020, with higher income shoppers driving nearly all gains. Higher income households plan to spend five times that of lower income households. Most of this season’s gains will be driven by higher income shoppers who expect to spend 15% more than last year (averaging $2,624 per household). Meanwhile, lower income groups plan to spend 22% less (averaging $536 per household).

The percentage of overall consumers who do not plan to spend at all this season is 11.5%, more than doubling from 2020 (4.9%). Two-thirds of this non-spender group (65%) are from lower income households compared to 12% from higher income households.

Higher prices and supply chain issues may dull the holiday shopping experience, but the retail executives Deloitte surveyed are less concerned than consumers. Retailers are placing orders with confidence that consumers will be spending, as 33% of retail executives stated that holiday order volumes grew by double digits year over year.

Five out of 10 retail executives say they expect higher prices on products, while seven in 10 consumers surveyed are worried about higher prices. Additionally, six in 10 retail executives are concerned they may not receive their holiday orders in time, and 75% of consumers are concerned about out of stocks.

However, supply chain issues are a concern for retailers. Forty-three percent of retail executives already expect their ordered holiday inventory to be delayed, and 64% are concerned about receiving inventory in time for the holidays. This is despite 43% of retailers placing their holiday orders earlier than in 2019, even as early as March. As a result, the holiday shopping season is starting sooner, with 68% of shoppers planning to shop before Thanksgiving (versus 61% in 2020), and 43% starting before the end of October (versus 38% in 2020). The earlier start to the season is extending the duration of the shopping season to more than six weeks, as compared to 5.9 weeks in 2020.

However, Black Friday events, many of which were cancelled last year, are expected to rebound this year with 31% of holiday shoppers planning to spend on Black Friday (versus 24% in 2020) and another 34% planning to spend on Cyber Monday (versus 29% in 2020).

Deloitte found that those surveyed are continuing to rely on social media to research products, with 28% planning to leverage social media for their holiday shopping, including to browse products (56%), read reviews or recommendations (53%) and discover promotions (50%). In addition, 52% of consumers leverage influencer-generated content for inspiration while looking for gifts to buy.

NACS Daily looked at a new report from TikTok, which found that 72% of consumers find shopping on social media platforms convenient, and 78% of consumers are open to purchasing a product on a social media platform.