Holiday Blues: Consumers’ shopping priorities changing as coronavirus cases spike nationwide, surveys say

November 2-8, 2020

By Daily Record Staff

Two recent highly cited national surveys by Deloitte and FTI Consulting show that total holiday spending is expected to decline ahead of Thanksgiving and Christmas Day as price and convenience are top considerations as coronavirus cases have peaked in nearly all 50 states.

According to the 2020 Holiday Gift Giving Outlook by FTI, a Washington, D.C.-based global business advisory firm, the mindset of holiday shoppers this year show changed preferences and burgeoning amid the fallout of COVID-19 and economic uncertainty. 

“While we see some conservatism in consumer spending, the coming holiday season presents an opportunity to reconnect with family and friends through gift giving at a time when we are missing that level of social engagement,” J.D. Wichser, head of FTI’s retail and consumer productions operations.  “It remains unclear whether these changing preferences are a short-term reaction to the events of 2020 or a sign of more durable changes, but the way we shop, the categories we prioritize, and the retailers best positioned to meet these changes have had to dramatically adapt to this new normal.”

Highlights from the survey of 1,000 U.S. consumers during the first half of September 2020 notes that most consumers will spend less as “good price” and “good value” were the top two factors identified as important to holiday gift decisions. One-third of individuals indicated that they would reduce spending by 10% or more. Across the entire data set, spending is likely to decline closer to 5%. Consumers are also willing to bargain shop as they seek out good value – 60% of those polled said they would wait for price reductions of at least 25%.

Consumers also plan to shop online more than ever before. Nearly 80% of respondents answered “yes” when asked if they were more likely to shop online compared to last year. They also plan to do most of their holiday spending online – 34% indicated that they would spend at least 80% of their holiday budget online, up from 22% in the prior year.

Consumer preferences will impact product categories and retailers differently. Social distancing, work-from-home orders and an uncertain economy have changed consumers’ priorities – they are focused more on at-home comfort and toys for kids or grandkids and less on clothing and accessories.

The survey also finds that the generational differences in how the effects of the pandemic are impacting holiday shopping expectations are less stark than may have been expected. Millennials are leading the shift, with 41% indicating that they expected to spend 80% or more online this holiday season. However, Generation X (30% intending to spend 80% or more online) and Baby Boomers (29% intending to spend 80% or more online) were not far behind.

The holiday shopping trends follow FTI Consulting’s recent projection that U.S. online retail sales will experience a $71 billion windfall in 2020 as a direct result of the impact of COVID-19 on consumers’ shopping habits. The consulting firm’s 2020 U.S. Online Retail Forecast expects U.S. online retail sales of $748 billion in 2020, compared to $598 billion in 2019 and its pre-pandemic 2020 forecast of $677 billion.

 “Children don’t need to worry about toys under the tree. However, many other traditional gift giving categories will have a bumpy ride this holiday season,” added Christa Hart, a senior managing director in FTI’s retail and consumer products division. “Consumers are waiting for good deals, and those with strong online offer and supply chain will be best positioned to deliver during this holiday.”

Despite its disruptive impact on consumer behavior and retail spending throughout the year, COVID-19 is not cancelling the holiday shopping season, although it is changing how and where consumers will shop, Deloitte concludes in its annual highly watched holiday shopping survey. For the past 35 years, Deloitte has been tracking the holiday shopping period, examining consumer behavior and what retailers can expect from shoppers as they tackle their holiday shopping. 

This year’s report, “2020 Holiday Survey: Reimagining Traditions,” surveyed 4,012 consumers online between Sept. 9-15, and provides key insights into how COVID-19 is impacting the holiday season. Above all the key takeaways, shoppers plan to spend cautiously this holiday season, averaging $1,387 per household, down 7% from 2019.

Home for the holidays takes on new meaning as consumers shift spending

While most consumers (71%) are in a similar or better financial situation than last year, nearly 1 in 3 (29%) say that their household’s financial situation is worse year over year. Given the financial uncertainty, 38% of consumers say they plan to spend less on the holidays, a level not seen since the Great Recession.

As consumers cut back on travel and other holiday experiences, they are planning on celebrating the season with loved ones at home and focusing their spending more on non-gift items like home, holiday furnishings and non-gift apparel. Consumers are expected to spend $435 per household on non-gift purchases this holiday season, accounting for nearly a third of household holiday spending and representing a 12% increase from last year.

Travel and socializing away from home are also expected to decline 34% year over year to $260 per household. Spending on gifts and gift cards is forecast to be $487 per household, a decline of 5% since 2019. 

Meanwhile, ongoing anxiety spurred by COVID-19 continues to compound consumers’ shift from in-store shopping to contactless options. More than half of consumers (51%) are anxious about shopping in-store during the holiday season due to COVID-19, and furthermore, 49% won’t return to pre-COVID shopping behavior until a vaccine is developed.

Among those who plan to shop predominantly online, nearly two-thirds of consumers will shop online to avoid crowds (65%), because they prefer the convenience of shopping at home (64%) and want to take advantage of free shipping or delivery options (60%). More than two-thirds (69%) of consumers noted that they prefer shopping at a store closer to their home, and 64% of shopping budget will be spent online during the holidays.

As consumers seek out safe and convenient options, 35% of shoppers indicated preference for buy online and pick-up in store (BOPIS), and the use of curbside pick-up (27%), which is expected to more than double from last year. Free return shipping is expected to be in high demand, as 70% of consumers will prefer a retailer that offers this option to make product returns most convenient. And while safety and convenience are important, a “great deal” continues to win the day, with 61% of consumers noting its relevance in selecting a retailer.

“In this season of uncertainty, price, value and convenience continue to be top considerations for consumers, as is the desire to get creative with how they celebrate the season with family, friends and pets, no matter the circumstances,” said Deloitte LLP Vice Chairman Ron Sides, who oversees the Wall Street consulting firm’s U.S. retail, wholesale and distribution research. 

As travel spend declines, retailers will likely benefit, and should receive a higher percentage of total holiday spend. The key for retailers is to stay flexible and offer options that appeal to consumers’ changing behaviors and address their evolving needs. Those that do will likely be better positioned for a bright holiday season,” explained Sides.

With about two months remaining in the holiday shopping season, U.S. consumers plan to complete their holiday shopping in about 5.9 weeks, which is 1.5 weeks shorter than prior years, as they plan to avoid crowds, shop closer to home, shift purchases online and maintain flexibility in their personal budgets.

Sixty-one percent of consumers plan to begin shopping before Thanksgiving, with an expected average spend of $1,537 per household. Another 39% plan to begin shopping on Thanksgiving or later, with an expected average spend of $1,149 per household. Also, holiday shoppers who plan to look for deals on major event days plan to spend more than the average shopper. Overall, due to social distancing mandates nationwide, consumers of all age groups are likely to rely more on Cyber Monday (29%) than Black Friday (24%).

Finally, as consumers look for items to purchase for themselves, 45% will wait for holiday sales to buy big-ticket items for the household. Consumers plan to stay close to home and indulge on beverages (33%) and food items (30%).

“More than ever, shoppers are looking for safe and convenient ways to keep the season fun and festive. As a result, more shoppers are turning to contactless shopping options like home delivery and curbside pickup for safety and convenience,” said Stephen Rogers, executive director of Deloitte Insights Consumer Industry Center. “This holiday season is going to test even the best supply chains and logistics. Retailers who successfully address last mile requirements this season will like what they find in their own holiday stocking.”