Worthington, OH – Experience gifts, online shopping and a slight drop in spending are among insights for the 2016 holiday season offered by Prosper Insights & Analytics.
Pam Goodfellow, principal analyst and consumer insights director for Prosper, notes anxiety and frustration regarding the 2016 presidential election seem to have affected consumers’ holiday spending outlook, which was recorded in early October. Planned spending per person on items such as gifts, décor, cards, foods and flowers is expected to be $796, according to the National Retail Federation, compared to $819 last year. However, as of early November, several of Prosper’s broader financial trackers indicate consumers have become less conservative with their spending plans month-over-month and year-over-year, suggesting that they are in fact gearing up for holiday spending.
“Holiday spirit will likely trump concerns stemming from Washington DC, but political anxiety may be a minor headwind facing retailers,” says Goodfellow. “Shoppers are lacking ‘must have’ items on their gift lists and will likely be distracted by ‘experience’ gifts, like cooking classes or spa packages, which cannot be bought via traditional retailers. And don’t forget about Amazon.com. Consumers are poised to ‘win’ the holiday season due to a highly promotional, competitive selling environment.”
Consumers plan to spend slightly less year-over-year. Up 4.4 percent, self-spending continues to be a highlight in purchase intentions and brings the total planned spending per person to $936, off marginally from 2015’s $953.
What’s Impacting Spending Plans
Certainly the election has caused anxiety, but the lack of “must have” products this season and an undercurrent of people having enough “stuff” are also factors. Since the Great Recession, a new normal attitude from consumers means they are are conditioned to look for sales, shop around, and not spend more than what they have to.
Who Will Be Spending This Season?
Millennials are the hot segment on every retailer’s wish list, but the youngest generation’s planned spending is down year-over-year. Retailers should zero in on Gen X-ers, who intend to spend more in 2016 than they did in 2015. This oft-overlooked generation is accounting for the largest proportion of planned gift spending, at 34 percent, followed by Boomers (31 percent), Millennials (21 percent) and Silent Generation (13 percent). Gen X shoppers plan to spend $46.6 billion on holiday gifts this year, 60 percent more than their Millennial counterparts.
Online = Major Player
Online continues to threaten brick and mortar retailing, as shoppers are equally likely to shop at department stores, discount stores and online for their holiday purchases this year. For 2016, celebrants estimate they will do 48 percent of their holiday shopping online, a record high. This figure rises above 50 percent among younger generations.
Gifts of Experience
Gifts of experience will distract consumers from reaching for more traditional gifts this year as well. Most popular among younger generations and upper income households, these “outside the box” gifts proved popular with Nordstrom and Macy’s shoppers during holiday 2015.
Amazon’s Prime Opportunity
Amazon continues to attract loyal shoppers via its popular Prime membership subscription. Currently, more than a third (36 percent) of Adults 18+ have access to Amazon Prime memberships, rising nearly 30 percent year-over-year. Prime memberships rise particularly among Nordstrom, Toys R Us, Target, and Macy’s shoppers. It’s Amazon’s game this holiday season; retailers who underestimate or fail to understand shoppers’ affinity for the online giant will likely be left out in the cold. CST