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Holiday shopping season is underway and American consumers are expected to spend billions of dollars on Christmas gifts for loved ones.
National Retail Federation (NRF) forecast that holiday spending is expected to reach record levels during November and December and will grow between 3% and 4% over 2022 to between $957.3 billion and $966.6 billion.
“It is not surprising to see holiday sales growth returning to pre-pandemic levels,” NRF President Matthew Shay said. “Overall household finances remain in good shape and will continue to support the consumer’s ability to spend.”
NRF defines the holiday season as Nov. 1 through Dec. 31.
Back to pre-pandemic trends?
Trillions of dollars of stimulus led to unprecedented rates of retail spending during the pandemic, according to NRF officials.
This year, however, holiday spending is consistent with the average annual holiday increase of 3.6% from 2010 to 2019.
“For all that the consumer has kept the economy afloat, the composition of spending from goods to services will also define holiday sales trends,” NRF Chief Economist Jack Kleinhenz said. “Service spending growth is strong and is growing faster than goods spending. The amount of spending on services is back in line with pre-pandemic trends.”
Shop from home, shop early
Online shopping has been one of the biggest shifts in consumer behavior from the COVID-19 pandemic.
Online sales are expected to increase between 7% and 9%, to a total of between $273.7 billion and $278.8 billion. That figure is up from $255.8 billion last year, according to NRF.
Nearly 60% of the people surveyed by Prosper Insights & Analytics in October expected to do their holiday shopping online.
Consumers are also shopping earlier
The holiday shopping survey also found that 43% of holiday shoppers planned to start making purchases before November.
However, consumer don’t believe they will complete their shopping early, the survey found. The majority (62%) expect they won’t finish their holiday shopping until December.
Spreading out budgets continues to be the top reason consumers get a head start on the holiday season.
Sticking to a budget might be why Black Friday and Cyber Monday haven’t lost their appeal.
The daily volume for shopping-related searches containing “deals” grew by over 2,300% last year during the week of Black Friday and Cyber Monday compared with September, according to Google Search Trends.
“Consumers remain in the driver’s seat, and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” Kleinhenz said.
Seasonal workers wanted
To meet the demand of the holiday season, NRF expects retailers will hire between 345,000 and 450,000 seasonal workers, in line with 391,000 seasonal hires in 2022.
Some of this hiring may have been pulled into October to support retailers’ holiday buying events in October, according to NRF officials.
“We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace,” Kleinhenz said. “Solid job and wage growth will be contributing factors this holiday season, and consumers will be looking for deals and discounts to stretch their dollars.”
Holidays by the numbers
- This year, 92% of consumers plan to celebrate the winter holidays, which include events like Hanukkah, Christmas and Kwanzaa.
- On average, those celebrating the winter holidays are budgeting $875 for gifts and seasonal items like decorations, cards, food and candy.
- This year, 43% of holiday shoppers are beginning to browse or buy before November.
- This year, 55% of people want gift cards for Christmas, while only 22% of people asked for jewelry.
- A record 196.7 million consumers shopped over the Thanksgiving holiday weekend last year.