EY Holiday Shopping Survey points to shifting consumer behaviors amid consolidated festive shopping season

• While 70% of US consumers enjoy festive season sales events and look forward to them, 63% are skeptical about the real value of festive season discounts.
• Half of US consumers have already begun holiday shopping, yet 41% say they are waiting to make purchases until November and December.

The EY Holiday Shopping Survey, a study of 13,000 global consumers, including 1,000 in the United States, points to how consumers are responding to this year’s consolidated holiday shopping season — and emphasizes how retailers can respond to increased consumer pressure in the final two months, with 41% consumers waiting to make purchases until November and December.

Even amid stretched consumer wallets, 70% of consumers are looking forward to festive sales but are expecting those sales to continue beyond just these tentpole moments. But at the end of the day, 52% note their willingness to pay full price for important gifts if needed, further spotlighting the double-edged sword on price and the bifurcation of consumer spending.

“Consumers are feeling increased skepticism when it comes to making purchases. At the same time, retailers are under pressure to compete more aggressively … with less time and fewer dollars available,” says Mark Chambers, EY Americas Retail Sector Leader. “The retailers that will come out ahead are the ones that have a solid understanding of how their customer segments are behaving, and how they are making purchasing decisions, and then tailoring their strategies accordingly.”

Among the survey’s key findings:

Price remains main, but not sole, purchasing factor

Price remains the key factor when it comes to when and how consumers will shop this holiday season. In fact, 47% of US shoppers note that price is the most important attribute when deciding which retailer to purchase from. Other key attributes when deciding on a retailer included product availability (27%) and lower shipping costs (26%). When it comes to what consumers plan to purchase this season on sale, 59% plan to buy clothing/accessories and 61% plan to buy technology/electronics.

And while previously “early bird” shopping was king, today, 41% of US consumers say they won’t even begin shopping for the festive season until November or December. That’s partly because 62% of US respondents find that desired items on their list often aren’t included in sales.

Further highlighting some consumer’s financial pressure: 56% of US consumers noted concerns around being able to pay for this festive season. That number rises to 61% of Gen Z consumers.

Shifting back to experiences

When it comes to where purchases are being made, in-store is still where most (68%) US consumers do their holiday shopping. This is especially true for Gen X (72%), who are less digitally savvy and more interested in seeing a product before purchasing. Surprisingly, digitally native Gen Z shoppers are also gravitating more towards in store than online, with 63% noting they will shop in store vs. 50% online.

Online shopping, though, is still considered a main purchasing method, with 58% of shoppers using online retailers to purchase holiday gifts. This tracks with EY-Parthenon predictions around online shopping, with e-commerce expected to account for around 20% of holiday purchases. Further, social media platforms are also on the rise and are expected to become significant sales channels in the coming years. According to the survey, 24% of US consumers plan to make purchases via shoppable social media.

“As the range of sales channels to purchase items grows, the importance of creating seamless experiences both in store and digitally is paramount. Successful retailers are meeting shoppers wherever they are with convenient, personalized and accessible experiences both in store and online,” says Isaac Krakovsky, EY Americas Consulting Retail Leader. “Now it’s up to retailers to create a workforce that can meet the demands of multiple sales channels this festive season; those that are able to build experiences seamlessly across channels will create loyalty and retain customers well past the holidays.”

Purchasing optionality puts inventory planning front and center

The big question: Should retailers wait until later in the season to launch big sales events, or should they continue on the historical path of earlier deals are better?

“Inventory is already defined at this point, but margin still remains a question for retailers,” according to Krakovsky. “We know consumers are continuing to spend, but only on the right product at the right time. Retailers need to find the balance to ensure their inventory is not only available, but also at the right price point heading into the festive season.”

Consumer sentiment remains modest

Taking into account elevated prices, higher interest rates and a cooling job market, all signs point to a more intentional consumer that allows them to stretch their wallet as much as possible this festive season. One key change over the past few years is how the spending behavior of households with different income level has diverged, with middle and high household incomes driving more retail spend than usual.

With that, the EY-Parthenon team predicts a modest 3% rise in retail sales for the November and December 2024 holiday season, but most of this year’s increase will be price driven. With inflation for holiday sales likely hovering around 2.5% by year-end, real volume sales are only expected to rise 0.5% year over year.

 Full article available at ey.com/HolidayShopping

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