ALEXANDRIA, Va.—Over 50% of U.S. consumers plan to spend the same or more this holiday season, while 43% plan to spend less, according to a new report by The NPD Group, which predicts that consumers will try to find the balance between financial caution and holiday celebration during the upcoming shopping season.

Consumers plan to spend an average of $760 on holiday shopping this year, which is higher than 2020 but below 2021 planned spending.

The report predicts that traditional holiday spending will be flat on discretionary general merchandise categories in November and December, while spending during the expanded holiday time, which is mid-October through early January, will be up 2.5% over 2021.

Also, fewer consumers will buy an experience this holiday season. Fifty-four percent of consumers plan to purchase an experience/intangible gift, down from 57% last year. Among those who do, fewer still plan to give the experience of charity or travel—down four percentage points over last year. Subscription services continue their decline from year ago: 18% plan to give them, a seven-point decline from last year.

Shopping Earlier
Compared to 2021, early shoppers will start even earlier, with half planning to begin before Thanksgiving Day. Thirty-nine percent of consumers surveyed were planning to start in September or earlier, up three points from last year, and 25% of shoppers plan to shop in early November, down three points over 2021.

Black Friday is still the No. 1 time for shoppers to find the best deals, followed closely by pre-November dates such as Amazon Prime promotions. Among those who plan to start early, 73% intended to do some of their holiday shopping during Amazon’s October 2022 Prime promotion. Twenty-two percent of consumers say they will get the best deals possible on Black Friday, up two points over last year.

However, NPD is predicting that online will see its first major decline this holiday season. Eighty percent of shoppers surveyed said they plan to shop online this year, down from 85% in 2021. But online shopping plans are still up from 2019 and earlier—76% of shoppers had planned to shop online in 2019.

Merchants are embracing holiday shoppers earlier this year, as big-box retailers, including Walmart and Target, offer early sales to boost transaction counts and get rid of excess inventory plus compete with Amazon.

Looking for Deals
Walmart announced the return of its month-long savings event, “Black Friday Deals for Days.” As in the past two years, Walmart will offer savings over three events during November and cap off a month of deals with Cyber Monday. New this year, Walmart’s events will begin on Walmart.com every Monday in November, and the retailer is also bringing back its Early Access benefit for Walmart+ members. The benefit gives members an extended early access window that begins seven hours before the scheduled start times for all three events on Walmart.com.

“Our customers are counting on us more than ever to help them find the season’s best gifts while delivering incredible savings like only Walmart can,” said Charles Redfield, executive vice president and chief merchandising officer for Walmart U.S.

Target recently announced that its Black Friday sales are starting now, with discounts up to 50% on toys and games, electronics, kitchen appliances and more. New weekly deals debut each Sunday, now through Thanksgiving weekend. Target’s holiday deals are happening three weeks earlier than last year. The company said in June that with consumer spending slowing, it would need to offer discounts to get rid of unwanted goods.

This year, retailers have had excess inventory, while shoppers have shifted their habits. The past two years have brought record online spending, and shoppers were willing to buy all sorts of items, which took its toll on the supply chain. In anticipation of continued spending and to get ahead of supply chain issues, companies stocked up. Then decades-high inflation hit Americans. High gasoline and food prices forced consumers to be more selective in their spending, leaving companies with more inventory than they could sell.

Morgan Stanley analysts said in a report that retail profits will decline, as retailers compete to cut prices faster than the other, which they called “a race to the bottom.” This tactic could hurt margins and fuel an earnings slowdown. But if retailers don’t offer aggressive discounts, they risk paying high costs to hold excess inventory, the analysts said.

The New York Times recently reported that discounting doesn’t get to the root of the problem, according to some analysts.

“There is a point at which lower prices don’t trigger incremental demand because the consumers already have it,” Simeon Siegel, a managing director at BMO Capital Markets, told the Times.

He said that retailers need to realize that customers are rethinking how they spend. Large purchases, such as patio furniture, may now only happen once for the consumers, and there is more lag time between purchases now. Someone may buy a candle every two to three months, whereas they were buying one every month over the past few years. And consumers are spending more on travel and experiences now than during the past two years.

With all of these variables, lowering prices might not trigger the demand a retailer wants, Siegel told the Times. It might simply just cut into a company’s profits.