COVID-19 is continuing to impact the saving and spending behaviour of consumers across the entire world. In fact, a remarkable 46% of consumers are seeing their savings dwindle, leading consumers to experience a:

• lasting drop in their savings,
• change in their spending patterns, and
• big disruption to their holiday plans.

Naturally, this is going to have an impact on how consumers spend their income during holiday shopping; so, what do you need to know to be prepared to tackle this challenge and support your consumers during the holiday season? Here’s the gist:

Consumers will spend less, but they’re still planning to spend.

20% of consumers are explicitly worried about their finances, but here’s the good news: 

• 67% plan to cut back spending in order to reserve funds for holiday shopping
• 24% of the people have or will have a budget for their holiday spending. 

Despite indications that consumers will aim to set aside money for holiday spending, the vast majority will be spending less on holiday celebrations this year. In fact, nearly 50% of respondents plan to spend less this holiday season than last holiday season with:

• 71% spending less than usual on celebrations with friends
• 67% spending less than usual on celebrations with family 
• At least 62% planning to spend less on key categories this holiday season, such as alcohol and other beverages to holiday snacks and other food
• 57% of Boomers planning to spend the same amount on gifts this year while
• 12% of Millennials/Gen-Z and urbanites are likely to spend more on gifts this year than last year.

When it comes to spending, not all holidays are created equal.

By now, consumers have come to terms with the idea that the holidays will look different this year. We got a taste of this with spring/summer celebrations like Mother’s Day and the 4th of July. However, those holidays were different with consumers able to spend time outdoors; whereas, the Q4 holidays are typically plagued with cold/precipitous weather across most of the country. With that in mind, are Americans still planning to celebrate winter holidays as readily as they would have last year? The good news is yes, they are. However, not all holidays are created equal. While 85% and 79% plan to celebrate Christmas and Thanksgiving, respectively, only shy of half plan to celebrate New Year’s Eve or Day (51% and 45%, respectively.) With that in mind, it will be critical to focus your Q4 efforts on holidays consumers are more apt to celebrate. 

Armed with this information, it’s clear that consumers will be under more financial strain this holiday season than ever before. With consumer budgets strapped, there is a higher risk that they will choose cheaper, private label options or cheaper brands over your brand named products. So how can you drive purchase intent over time and offer special deals to help consumers choose your brand over the competition? Learn more here.