2023 Deloitte holiday retail survey

Holiday spirit (and spending) is back

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Authors

Executive summary

Executive perspectives

Cheat sheet

Spending behavior

Channel and format preferences

Consumer behavior

Authors

Nick Handrinos

Vice chairman and US Retail & Consumer Products leader Deloitte Consulting LLP nhandrinos@deloitte.com

Brian McCarthy

Principal Retail, Wholesale & Distribution and Consumer Products Deloitte Consulting LLP brimccarthy@deloitte.com

Stephen Rogers

Executive director Consumer Industry Center

Deloitte Services LP

stephenrogers@deloitte.com

Lupine Skelly

Retail research leader Retail, Wholesale & Distribution Consumer Industry Center Deloitte Services LP lskelly@deloitte.com

Kusum Manoj Raimalani

Analyst Retail, Wholesale & Distribution Consumer Industry Center Deloitte Support Services India Pvt Ltd. kraimalani@deloitte.com

Executive summary

Source: (1) Alex Tanzi, “Only richest 20% of Americans still have excess pandemic savings,” Bloomberg, accessed October 10, 2023.

As the US economy continues to stave off a recession, it wouldn’t have come as a surprise to see consumers pull back on their holiday spending in 2023. In fact, when we checked in with consumers in our annual back-to-school survey, they were cautious about the economy and were skipping nonessentials to rein in spending. However, our 2023 Deloitte holiday survey results highlight that back-to-school (a commodity event) and holiday (a splurge event) have very different drivers. This holiday season, consumers are steadfast in their intent to live in the moment and make it memorable. They plan to spend an average of \$1,652 this season, surpassing prepandemic figures for the first time.

There are several factors at play. Participation levels have been inching up since record lows in 2021; this year, 95% of consumers say they plan to purchase during the holiday season. In addition, consumers are factoring in inflation, with three-quarters expecting higher prices year over year (YoY). We’re also seeing a resurgence in the middle-income group after stagnant spending the last several years (+26%), while the \$200K+ group plans to spend 22% more this year.

Consumers are prioritizing nongift purchases (+25% YoY) this season as they restock holiday decorations, furnishings, and nongift apparel. And they’re planning to splurge on themselves, with 75% expecting to selfgift this year. In short, the tinsel is no longer in a tangle.

With many shopping trends finding equilibrium this year, it seems like we’re approaching 2019 levels, but there are still cracks in the foundation. Savings rates have dwindled,1 and 17% of respondents say they have student loans to start repaying this fall, causing some to cut back on holiday expenditures.

For retailers, a winning strategy may come down to driving value around key promotional events for inflation-wary customers. Expected participation rates for promotional events are robust, with a quarter planning to shop on October promotional days, and 66% (versus 49% in 2022) planning to shop the week of Black Friday–Cyber Monday (BFCM). The promotional timing will be crucial as consumers intend to wrap up their shopping in just 5.8 weeks—a time frame that has shrunk from 7.4 weeks pre pandemic. The old retail adage of “having the right product, at the right price, at the right time” may ring true more than ever this year.

Happy shopping!

Executive perspectives

Holidaying like it’s 2019!

Holiday spirit (and spending) is on— consumers expect to spend \$1,652, surpassing prepandemic levels for the first time. As consumers grapple with inflation, they plan to spend 14% more YoY. However, the compounded annual growth rate (CAGR) has increased a modest 2.5% since 2019.

The tinsel is no longer in a tangle

As consumers look to put the fun back in festivities, three factors have contributed to the uptick in spend. Consumers are participating at a higher rate (95% versus 92% in 2022 and 88% in 2021), they’re expecting higher prices (74%), and the \$50K– \$99K (+26%) and \$200K+ (+22%) income groups are splurging.

‘Tis the season for balancing budgets

With consumers expecting higher prices, they are making adjustments to stretch their budgets. They plan to buy fewer gifts (eight versus nine in 2022), spend more on gift cards (\$300 versus \$217 in 2022), and pounce on promotional events, with 66% (versus 49% in 2022) intending to purchase during BFCM week.

Cheat sheet

Spending

Holiday participation reaches prepandemic levels at 95% (versus 92% in 2022).

72% are expecting higher prices this year (versus 73% in
2022), despite moderating inflation.

The average spend on gifts, nongifts, and experiences increases to \$1,652 (+14% YoY), compared to \$1,496 in 2019 (+2.5% CAGR).

The \$50K–\$99K and \$200K+ income groups are feeling more confident as their spending increases by \$315 (+26%) and \$709 (+22%) YoY, respectively.

Consumers are navigating inflation by budgeting more for fewer gifts (eight versus nine in 2022) and visiting fewer stores (4.2 versus 5.9 in 2022).

Shoppers plan to allocate a higher proportion of their budget to gift cards (\$300 versus \$217 in 2022) and pull back spending on food and beverage gifts.

75% can be tempted to self-gift, but constrained budgets may be a hurdle.

Preferences

Preference for shopping in store returns to prepandemic levels as 37% of shoppers’ budget will be allocated to shopping in store (versus 35% in 2022 and 36% in 2019).

Online-only retailers (63%) and mass merchants (53%) lead as the most preferred formats, returning to 2019 levels.

Department stores are popular among high spenders (40% versus 18% others).

Preference for buy online, pick up in-store (BOPIS) declines as 28% plan to use this channel to acquire gifts this year, versus 35% in 2022.

Online shoppers are seeking low purchase thresholds, with an average willingness to spend \$40 to qualify for free shipping.

Social media usage has leveled off (34%, unchanged from last year) after peaking during the pandemic.

Sustainable products and packaging are a priority for over half of younger generations.

79% have little to no trust in retailers’ ability to use artificial intelligence responsibly.

Timing

Nearly a third of shoppers’ budget will be spent in the last two weeks of November, with 78% active shoppers during that period.

The shopping duration has shrunk to an average of 5.8 weeks versus 7.4 weeks in 2019, leaving retailers with a smaller window to engage customers.

24% plan to shop during October sales events.

Promotional events during BFCM week will attract 66% of shoppers, as they aim to counteract increasing prices (compared to 49% in 2022).

Higher-income groups plan to participate during BFCM week at higher rates than lower-income ones.

Spending behavior

Holidaying like it is 2019!

The holidays are back on—the average expected holiday spending surpasses prepandemic levels for the first time

Average expected holiday spend

Reasons for uptick in spend

95% plan to shop for holiday this year versus 92% in 2022, 88% in 2021, 95% in 2020, 97% in 2019

72% are baking in higher prices this year

The \$50K–\$99K and \$200K+ income groups plan to “sleigh” it Average spend up by \$315 (+26%) and \$709 (+22%) YoY, respectively

RETAIL EXECUTIVES’ VIEW 74% expect holiday sales to increase YoY.

Question: “How much do you expect to spend on each of the following items during the upcoming year-end holiday season?” Note: N = 4,318.

Retail executives’ view: “What are your expectations about this year’s holiday-related sales at your company compared to last year’s holiday-related sales?” (N = 43).

The growth in holiday spending is both modest and dramatic

The CAGR has only increased 2.5% in four years, but the YoY growth rate has accelerated as consumers grapple with inflation expectations

Growth in average expected holiday spending on gifts, nongifts, and experiences

Question: “How much do you expect to spend on each of the following items during the upcoming year-end holiday season?”
Notes: N = 4,318. All dollar values are in US dollar. *Gifts + nongifts = retail spend; nongift purchases include clothing for family and self, home furnishings, and holiday decorations. **Experiences include entertainment at home and socializing away from home, such as restaurants and concert tickets.

Average spend on nongift items, by income

'Tis the season to restock holiday decor and apparel

82%

plan to shop for nongift items versus 77% in 2022, 74% in 2021, 82% in 2020, and 88% in 2019

Percentage of shoppers buying nongift items: 67% nongift clothing for self or family 59% home/furnishings/holiday decorations

Question: “How much do you expect to spend on each of the following items during the upcoming year-end holiday season?” Note: N = 4,318.

This year, shoppers are prioritizing nongift purchases, with lower- and middle-income groups planning to replenish these items after two years of restraint

The middle- and very high-income groups plan to “sleigh” it

Question: (1) “How much do you expect to spend on each of the following items during the upcoming year-end holiday season?” Note: N = 4,318.

Nearly 30% of shoppers will be responsible for \~70% of holiday spending

Retailers looking to win this holiday season should consider leaning into the drivers of high spenders

L Who are high spenders?	What are their preferences?	How can retailers win?
27% of holiday shoppers are high spenders*; they wil be responsible for 68% of total holiday spending1	They are more likely to shop for electronics (67% versus 46% others) and health and wellness (62% versus 41% others)2	Start messaging early 48% of high spenders willstart shopping before October end (versus 40% others)4
They plan to spend $2,146 or more on average this season, purchasing 10 gifts (versus others buying eight gifts)1	They spend nearly 3X on experiences, compared to the average holiday shopper1	Promote quality High spenders are looking for high-quality products as a priority (versus others who are looking to get a great deal)5
High spenders are evenly split between men and women, 27-59 years old (58%), and with an annual income greater than $100K (61%)	40% plan to shop at department stores (versus 18% others)3	Highlight self-gifting 58% of high spenders can be tempted to buy gifts for themselves (versus 45% others)6

Questions: (1) “How much do you expect to spend on each of the following items during the upcoming year-end holiday season?”; (2) “Which of the following do you plan to buy as a gift this holiday season?”; (3) “Where do you plan to shop for gifts this holiday season?”; (4) “When are you likely to begin your holiday shopping this year?”; (5) “Which are the three most important attributes while selecting a retailer during holiday shopping?”; (6) “Could you be tempted to buy a gift/gifts for yourself this year?”

Notes: N = 4,318. *High spenders belong to the top 20 percentile of holiday shoppers based on their planned spending.

Consumers are checking their lists and planning for higher prices

Despite moderating inflation, most consumers expect higher prices in key categories

Categories consumers expect to be higher this holiday season2

Questions: (1) “Compared to last holiday season (2022), I expect holiday prices to be:”; (2) “This holiday season, I expect higher prices for:” Note: N = 4,318.

Categories perceived as having higher prices lose ground to gift cards

\$300

average amount that consumers plan to spend on gift cards versus \$217 in 2022

76% of gift card shoppers expect higher prices versus 68% of others

Question : “Which of the following do you plan to buy as a gift this holiday season?”
Notes: N = 4,102. ^Ranking of holiday gift categories is based on the share of spend—i.e., categories in which consumers plan to spend the largest proportion of their budget appear at the top. *Gift cards & other include gift cards (physical/digital), experiences, and
subscriptions.

Consumers are making modifications to stay within budget

As consumers navigate inflation, they’re budgeting more to purchase fewer gifts and waiting for the best deals

Only 57% expect to stay within a fixed budget1 versus 63% in 2022

RETAIL EXECUTIVES’ VIEW 56% expect retail prices to rise by single digits, and 19% expect them to rise by double digits.

Add items to wish list/online shopping cart and wait for deals4

Average number of gifts/gift cards purchased2 versus 9 in 2022

Average physical stores visited3 versus 5.9 in 2022

Student loan repayments are a lump of coal for some but will likely have minimal impact overall

17%

of consumers have student loans to repay this fall1

By income:
15% Less than \$50K
19% \$50K–\$90K
17% \$100K–\$199K
21% \$200K+

Questions: (1) “Do you have any student loans that you need to start repaying this fall?” (N = 4,318); (2) “How are you adjusting your holiday spending as you start repaying your student loans this fall?” #multi-select (N = 731).

For those starting to repay their student loans, nearly half may cut back on holiday expenditures

Consumers repaying student loans plan to adjust spending by ...2

Shoppers plan to wrap up something for themselves, if the budget allows

75%

of consumers can be tempted to buy a gift for themselves1

However, 53% will prioritize cutting back on self-gifting if their budget becomes too constrained2

Questions: (1) “Could you be tempted to buy a gift/gifts for yourself this year?”; (2) “If my budget becomes more constrained than expected, I will cut back the most on …”; (3) “In the past, I have been tempted to purchase myself a holiday gift that:” Note: N = 4,102.

Retailers that can appeal to the drivers of self-gifters may have an opportunity to generate add-on sales

Motivations for self-gifting3

Channel and format preferences

Late November spending traditions persist despite attempts to spur early shopping

With consumers only planning to shop 5.8 weeks, retailers’ opportunities for gains may occur around promotional periods

5.8 weeks average shopping duration versus 7.4 weeks in 2019
Questions: (1) “What percentage do you plan to spend during the following months?”; (2) “What holiday shopping events are you likely to participate in?” Notes: N = 4,102; *retail categories include gifts and nongift spending.

It’s all about the bargains—BFCM is back

Higher-income groups plan to participate in BFCM events at a higher rate

Shopper participation by shopping event day

66%

of holiday shoppers plan to shop during the Thanksgiving week versus 49% in 2022, 47% in 2021, and 53% in 2020

Question: “What holiday shopping events are you likely to participate in?” #multi-select
Note: N = 4,102.

Share of holiday spend, by channel1

Preference for in-store purchases returns to 2019 levels

RETAIL EXECUTIVES’ VIEW

79% expect in-store holiday shopping traffic to have at least single-digit growth YoY (versus 73% in 2022).

Top three reasons for spending more in-store …2

44% Ability to interact with the product
39% To ensure product quality
28% Avoid shipping costs

Questions: (1) “What percentage of your total holiday budget do you expect to spend …?”; (2) “Why do you anticipate shopping more in a physical retail store than online?”
Note: N = 4,102.

Retail executives’ view: “What are your expectations for your company’s holiday shopping traffic compared to last year’s holiday season?” (N = 43).

Online purchases saw new highs during the pandemic but have now reached an equilibrium point as consumers look to get back into stores

76%

of consumers often or always shop at their favorite retailer3

Planning to spend the most (2023)2

37% Online-only retailers
16% Mass merchants
4% Department stores
4% Off-price stores
4% Warehouse clubs

Questions: (1) “Where do you plan to shop for gifts this holiday season?”; (2) “Where do you anticipate spending the most money this holiday season?”; (3) “How would you describe your relationship with your favorite retailer in general?”
Note: N = 4,089.

Social media usage reaches new high, but has tempered since the pandemic

34%

plan to use social media for holiday shopping1 versus 34% in 2022, 28% in 2021, 26% in 2020, 23% in 2019

Questions: (1) “Do you plan to use social media sites (e.g., blogs, discussion groups, or social networks) to assist in your holiday shopping (e.g., research, purchase)?”; (2) “During this holiday season, how do you plan to use social media for shopping?” Note: N = 4,102.

Social media is still primarily being used for holiday research and inspiration

Consumer behavior

Online shoppers are looking for low purchase thresholds to earn free shipping

8 in 10

are willing to meet a minimum purchase threshold for free shipping1

6 in 10 would abandon their cart if they discover hidden shipping costs before checking out2

Questions: (1) “What dollar amount are you willing to spend to earn free shipping?”; (2) “What would cause you to abandon your cart while shopping online?”
Note: N = 4,102.
Source: ^Liz Young, “Retailers set higher bars for free shipping as delivery costs surge,” WSJ.com, July 10, 2023.

With loyalty at risk, retailers can look to find the sweet spot between shipping costs and customer satisfaction

What consumers want

versus

What retailers are offering

\$40

Average order amount consumers willing to spend for free shipping1

By income:
\$32 Less than \$50K
\$38 \$50K–99K
\$46 \$100K–199K
\$53 \$200K+

\$64

Average US minimum to qualify for free shipping in 2023^ Versus \$52 in 2019

Younger shoppers lead the charge for greener holidays

49%

are concerned about the amount of packaging used with online orders

RETAIL EXECUTIVES’ VIEW

93% are prioritizing sustainability, with 56% specifically seeking ways to reduce packaging waste.

Notes: (N = 4,102); % agree/strongly agree. *Younger generation includes Gen Z (18–27 years) and Millennials (27–42 years), while the older generation includes Gen X (43–58 years), Baby Boomers (59–77 years), and Seniors (78+ years). **Deloitte calculations; others refers to those who do not shop for sustainable holiday gifts whenever possible. Retail executives’ view: “Thinking about your primary product category, in what ways will you prioritize environmentally friendly or socially responsible practices during the holiday season this year?” (N = 43).

Retailers prioritizing sustainable initiatives may have a chance to gain mindshare with a growing cohort of young shoppers

Sustainable gift shoppers, by generation

Sustainable holiday shoppers spend 29% more than others**

Building trust is crucial as retailers accelerate AI capabilities

79%

of consumers have little to no trust in retailers’ ability to use artificial intelligence responsibly in their operations1

Only two in 10 plan to use generative AI for holiday shopping, primarily to look for deals

16%

Plan to use generative AI for holiday shopping2

By income:
13% Less than \$50K
16% \$50K–99K
19% \$100K–199K
23% \$200K+

By generation: 29% Gen Z 32% Millennials 12% Gen X

Users of generative AI plan to use it for …3

1 Finding the product at the best price Offering valuable product recommendations 3 Making shopping less time-consuming

RETAIL EXECUTIVES’ VIEW 98% are familiar with generative AI, but only 33% are well aware of its implications for their business.

Questions: (1) ) “Of the following, do you trust retailers to …,” % for No trust at all/little trust; (2) “Do you plan to use generative AI for your holiday shopping?”; (3) “How does generative AI enhance your shopping experience?”
Note: N = 4,102.
Retail executives’ view: “How familiar are you with generative artificial intelligence (AI)?” (N = 43).

About the survey

Consumer survey Timing August 30 to September 8, 2023

Sample

The survey polled a national sample of 4,318 consumers and has a margin of error of plus or minus one to two percentage points for the entire sample.

Methodology

Executive survey Timing June 23 to June 30, 2023

Sample

The survey polled 43 retail industry executives, of which 93% were from retailers with annual revenues of \$1 billion or more. The executives included buyers, senior buyers, and buying/merchandising managers who had a medium or high level of involvement in buying and merchandizing for the coming holiday season.

The surveys were developed by Deloitte and conducted online by independent research companies.

Thank you

The authors would like to thank Brooke Furman, David Levin, Srinivasarao Oguri, Rithu Mariam Thomas, Negina Rood, Kianna Sanchez, and Michele Stoffel for their contributions to this survey.

Consumer Industry Center Retail team

Lupine Skelly Research leader

Ram Sangadi Associate vice president

Kusum Raimalani Analyst

Sangharsh Shinde Analyst

Deloitte Consumer Industry Center

The Deloitte Consumer Industry Center provides premiere insights based on primary research on the most prevalent issues facing the consumer industry to help our clients run effectively and achieve superior business results. The center is your trusted source for information on leading trends and research that connect insights, issues, and solutions for Deloitte’s four consumer sectors: automotive; consumer products; retail, wholesale, and distribution; and transportation, hospitality, and services.

About the Deloitte Retail practice

The retail industry is transforming at lightning speed, and retailers are being forced to find ways to grow profitably while also meeting rising consumer expectations. Today’s customers don’t just expect the retail industry to operate efficiently, but empathetically too. They are buying into better and are demanding that brands share their values around purpose, inclusion, trust, transparency, and innovation.

Leaders in this rapidly shifting industry should have better insight, better innovation, and a better connection to their customers. That’s why they turn to Deloitte. Driven by a relentless pursuit of innovation and the pulse of the consumer, Deloitte helps many of the world’s leading brands in the retail sector align with their customers’ values, create lasting competitive advantages, build enduring customer relationships, and shape the future of the industry. www.deloitte.com/us/retail

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation.

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2023 Deloitte holiday retail survey

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Table of contents

Authors

Nick Handrinos

Brian McCarthy

Stephen Rogers

Lupine Skelly

Kusum Manoj Raimalani

Executive summary

Executive perspectives

Holidaying like it’s 2019!

The tinsel is no longer in a tangle

‘Tis the season for balancing budgets

Cheat sheet

Spending

Preferences

Timing

Spending behavior

Holidaying like it is 2019!

The growth in holiday spending is both modest and dramatic

82%

The middle- and very high-income groups plan to “sleigh” it

Nearly 30% of shoppers will be responsible for \~70% of holiday spending

Retailers looking to win this holiday season should consider leaning into the drivers of high spenders

Consumers are checking their lists and planning for higher prices

Categories perceived as having higher prices lose ground to gift cards

Consumers are making modifications to stay within budget

17%

Shoppers plan to wrap up something for themselves, if the budget allows

75%

Channel and format preferences

Late November spending traditions persist despite attempts to spur early shopping

66%

Preference for in-store purchases returns to 2019 levels

RETAIL EXECUTIVES’ VIEW

76%

Consumer behavior

8 in 10

Younger shoppers lead the charge for greener holidays

49%

RETAIL EXECUTIVES’ VIEW

79%

Users of generative AI plan to use it for …3

About the survey

Sample

Methodology

Executive survey Timing June 23 to June 30, 2023

Sample

Thank you

Consumer Industry Center Retail team

Deloitte Consumer Industry Center

About the Deloitte Retail practice

About Deloitte

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2023年假日零售调查报告（英）-29页