Consumers less concerned about economy negatively influencing their holiday spending.
Retailers can look forward to heightened holiday sales according to a new report from global information company NPD Group.
The NPD Group’s “2016 Holiday Purchase Intentions Survey,” revealed that consumers plan to spend an average of $636 on holiday-related expenses, up 3% from what they anticipated last year.
When questioned more broadly, 14% of consumers plan to spend “more” than they did during last year’s holiday season and 17% say they’ll spend “less”—virtually unchanged from 2015 results. Consumers are also less concerned about the economy spoiling their holiday fun: when asked how the state of the economy will influence their holiday purchases in 2016, 12% said it will have a ‘significant impact’ is down from recent years (14% in 2015, 19% in 2014).
“All signs point to a holiday retail season that will outperform last year’s,” said Marshal Cohen, chief industry analyst, The NPD Group, Inc. “The unvarying holiday spending intentions expressed by consumers are a sign that even this year’s intense election cycle has done little to dampen consumer confidence going into the holiday season, which we forecast to grow moderately.”
Best laid plans
Planning to spend less and actually tightening the purse strings are hardly one and the same. Case in point: 16% of consumers were planning on cutting back during the 2015 holiday season, but more than 20% of consumers reflected that they actually spent more than they’d planned on their 2015 holiday purchases.
Some may be more determined than others to keep their spending in check this year – particularly those still dealing with the ghosts of holiday purchases past. More than half (57%) of consumers used credit cards for at least some of their holiday season purchases last year, of whom 22% still have at least some of that debt hanging over them. In the end, over a quarter of those still paying for their last year’s holiday purchases say they’ll spend less on Holiday 2016.
Growth across purchase channels and product categories
Retailers with online purchase channels stand to gain, as consumers plan on shopping more through online channels this year. On average, shoppers plan on doing 38% of their holiday shopping online (up from 33% last year and 29% in 2014).
Looking more specifically at where consumers plan to shop during the 2016 holiday season, growth is apparent across the marketplace, from online-only “e-tailers” to toy stores to specialty retailers in the beauty category (and most other purchase channels in between):
A similar rising tide is evident looking at what consumers expect to buy this holiday season. Though outlooks vary among individual products (for example, purchase intent for movies/DVDs, music, and video games/ systems are all unchanged from 2015), aggregated product “supercategories” all show rising interest.
“Consumer response is suggesting growth across retail channels, despite the growth and dominance of online shopping, which points to a sense of optimism,” said Cohen. “The lack of stand-out, must-have products this holiday season is benefiting the categories that are delivering on basic consumer wants, but marketers need to find new ways to engage and excite holiday shoppers to drive significant growth.”
Off to the races
Two in 10 consumers have already started their holiday shopping, and how early – or late – they kick things off can tell us a great deal about their shopping habits and plans.
For starters, earlier shopping correlates with bigger spending. Twenty-seven percent of heavy spenders (those planning to spend $750 or more) have already started shopping; this drops to 24% among midlevel spenders ($300-$749) and 17% among low spenders (<$300). None of this should be taken to mean that early shopping causes higher spending – from a causal standpoint, those with longer lists are more likely to feel a need to get an early start.
Just because they’re spending more, doesn’t mean they’re not spending carefully. Early shoppers are more likely to say they comparison shop before they buy gifts (45% vs. 30% of late shoppers) and that they plan on buying all their holiday gifts on sale (38% vs. 21% of late shoppers).
Oh, and in all the last minute rush, late shoppers may not have time to pick up a little something for themselves – they’re less likely than their early shopper counterparts to say that when they shop for others, they also shop for themselves (15% vs. 26% of early shoppers).
What holiday fatigue?
While there may be cynics among us, six in 10 consumers are looking forward to the holiday season, and nearly half say the simple act of going out shopping during the holidays puts them in the holiday spirit.
“Consumers are ready to spend this holiday season. However, more than ever before, how much they spend will be determined by their own perception of the products and promotions they are presented with, rather than the simple fact that the products and promotions are there,” added Cohen.
Methodology
The Holiday Purchase Intentions Survey is designed to better understand consumers’ shopping and spending intentions for the upcoming holiday season. An online survey was fielded in September, 2016 among a U.S. representative sample of NPD online consumer panel members. The survey was completed by 3,499 individuals aged 18 and older.
