COVID depression is setting in again, and this time it’s likely to disrupt the most wonderful time of the year—and the most important, for brands and retailers. New research from professional services network KPMG found that consumers plan on buying fewer gifts and spending less this holiday season, with an 18 percent reduction in their average budget from last year. On top of that, 41 percent of consumers also said that they are not planning on going to Black Friday sales in person.
“Faced with considerable uncertainty and reduced household income, consumers are spending less this holiday season, focusing on essential purchases for the home and gifts for close family members,” said Scott Rankin, National Advisory Leader for Consumer & Retail at KPMG LLP, in a news release. “Retail customers are forming new shopping habits, which are expected to continue into 2021 and beyond.”
According to the firm’s new study, Season of Reckoning: 2020 COVID-19 Consumer Pulse/Holiday Report, average spending per person this holiday season is expected to decrease to $515 from $627 last year, with the majority of consumers shopping either in October (25 percent) or November (38 percent), although a fair number began as early as August (12 percent). In addition, 60 percent of consumers plan to give to the same number of people this holiday season, while 36 percent will give to fewer people.
Consumers also indicated that Black Friday and other significant retailer events will look different this year, with less in-store shoppers and 41 percent saying that Black Friday is their most important shopping event, compared to Cyber Monday or Prime Day.
“In-store retailers hoping for a holiday reprieve may be disappointed,” added Rankin. “The migration to online continues across nearly all retail segments.”
U.S. consumers foresee a longer, uncertain road to full economic recovery
- Approximately one third of consumers surveyed said their employment status was impacted by COVID-19.
- Thirty-six percent of consumers claimed a negative impact to income and an average reduction of 34 percent.
- Consumers have become more pessimistic about the length of time it will take for their spending to return to pre-COVID-19 levels.
- Nineteen percent of consumers have become more mindful of their own spending habits.
- Anticipation of reduced spending across discretionary categories like entertainment, restaurants, and apparel will be less pronounced in December than it was in April.
Holiday spending: smaller gift budgets, enduring traditions
- Holiday gift spend on family such as parents, children, and significant others, is expected to experience the smallest decline (2-5 percent); holiday gift spend on friends, coworkers, and school children is expected to experience the largest decline (more than 20 percent).
- Categories where respondents expect the greatest declines are in gift cards (14 percent decline), clothing and accessories (27 percent decline), and electronics (16 percent decline).
- All product categories are expected to be bought more from online platforms in comparison to last year—for example, there may be a 25 percent increase in online spending on clothing and accessories, a 19 percent increase on electronics and a 14 percent increase on computer and hardware.
This survey was conducted in September 2020, and it polled 1,000 U.S. consumers to learn about the continuing economic impact of COVID-19, anticipated retail spend for the holiday season, and shopping preferences.