With the 2024 holiday season underway, inflation and the rising cost of living continue to impact consumer spending habits, even as optimism remains high. The latest industry data sheds light on three emerging trends all retailers should keep in mind this season: Shoppers’ cautious spending plans, their focus on discounts, and the increasing shift toward experiential spending. In a season typically marked by spending, Snipp’s 2024 Holiday Survey, which polled U.S.-based consumers, shows that inflation and rising living costs are heavily influencing holiday budgets. Read on to learn more!
In a season typically marked by spending, Snipp’s 2024 Holiday Survey, which polled 299 U.S-based consumers, shows that inflation and rising living costs are heavily influencing holiday budgets.
Ninety seven percent of consumers report that the cost of living impacts their holiday shopping plans, with 65% saying it influences them “extremely” or “significantly.” Eighty one percent of respondents plan to cut back on holiday shopping compared to last year, with 38% stating they will cut back “extremely.” Generationally, Boomers (69%) are the least likely to scale down, while Gen Z (85%) leads in planned spending reductions.
The categories most likely to be impacted include electronics (53%), health & beauty (45%), and toys (44%), with smaller declines expected in home goods (35%) and groceries (36%). This suggests that consumers are prioritizing essentials and scaling back on higher-priced gift items this year.
This trend toward frugality has been consistent throughout the year. According to TD Bank’s 2024 Consumer Spending Index, 30% of respondents have been cutting back spending due to concerns about the economy and 42% have altered their financial priorities over the past year.
Amid rising prices, consumers are focused on finding the best deals. The Snipp survey found that 50% of shoppers rate discounts as the top influencer for their holiday purchasing. Additionally, 61% of consumers said they use coupons regularly, a third (33%) always use them, and 28% frequently do.
Gen Z and Gen X are the thriftiest, with 67% of these groups saying they always or frequently use coupons, compared to Millennials (60%) and Boomers (43%). According to data from Emarketer, 33% of US grocery shoppers have upped their coupon usage this year compared to about a quarter (26%) in 2023.
When it comes to discounts, groceries top the list of items where coupons and promotions are most valued, with 56% ranking it as their #1 category, followed by packaged food (16%), apparel (8%), and electronics (7%).
Snipp also found that 76% search online for promotions, offers, loyalty programs, and coupons, while in-store promotions (52%) and social media (48%) also play a role. Consumers’ top choice for receiving promotions is email (44%), with fewer preferring texts (21%), in-app notifications (14%), or social media (12%). Emarketer also reports that 35% of US consumers access or download digital coupons when shopping in-store.
With competition for holiday shopper’s share of wallet heating up, retailers who can deliver personalized offers to consumers pre, during and post shopping are more likely to capitalize on the busy season. Providing Wi-Fi and incorporating QR codes on displays can also help retailers deliver value at the point of purchase.
Inflation is also pushing consumers to find creative ways to save on holiday meals, with many opting for budget-friendly alternatives. Key findings from the Snipp survey show: 45% plan to substitute ingredients with more affordable options, 43% will cook more at home rather than dine out. Forty two percent intend to shop at discount or budget grocery stores.
Deloitte’s 2024 holiday survey also identified a shift toward experiential spending, with a 16% increase in spending on experiences such as holiday events and gatherings. Deloitte’s data also indicates a focus on non-gift purchases like party apparel and decorations (+9%), signaling that consumers are prioritizing social experiences as part of their holiday celebrations.
Grocery retailers that offer specials on holiday meal ingredients will reap the benefits of increased food traffic this season. Target is a great example of this, recently lowering the price of a Thanksgiving meal, saying shoppers can feed four for $20 or five bucks less compared to last year. Retailers who provide money-savings recipes or create private label merchandizing strategies that emphasize savings on meals will benefit from increased sales for those looking to economize during the season.
As the holiday season unfolds, consumer behavior is shaped by a mix of cautious spending, and a desire for value. While inflation is prompting many to cut back and seek out discounts, the importance of experiences is growing, with many shoppers focused on creating memorable celebrations rather than splurging on goods. Retailers and CPG brands catering to this demand for value and convenience, particularly through online channels and experiential product offerings, will be well-positioned for success in the 2024 holiday season.
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