According to a forecast released by AlixPartners, the global consulting firm, holiday season sales in the United States should grow from 3% to 6% year over year.
In its annual AlixPartners Holiday Outlook Survey of more than 1,000 consumers in the United States, 26% of respondents said they plan on spending less this holiday season than they did during the 2022 period, with spending reductions more significant among lower-income households. The survey indicated that 38% of households earning incomes less than $45,000 a year said they plan to spend less.
The survey suggested that consumers would cut back by trading down, as 33% of survey respondents said they would shop for more affordable brands and retailer private labels, and give fewer gifts, including self-gifts, as 24% of respondents said they would reduce purchasing presents for themselves. Also, 38% of consumers said they would moderate holiday spending by purchasing half or more of holiday gifts from goods on sale.
Home furnishings, jewelry and accessories are likely categories to experience the effects of consumer cost-cutting.
More than 70% of survey respondents said they would research products they intend to purchase online by reading product reviews and doing price checks across retailers, as well as by researching gift ideas through influencers, news sources and blogs.
As artificial intelligence gets more general notice, the survey results demonstrated that consumers are most favorable to AI enhancements that improve product recommendations, provide personalized offers and streamline service with virtual assistance.
In announcing the survey results, Bryan Eshelman, Americas leader of the AlixPartners retail practice, said, “Higher-income consumers may not be in the best of times, but we see them sustaining their spending through the holidays. This year’s retail winners will be those that are ‘value-right.’ By that we mean those retailers that offer value in categories where consumers are targeting cutbacks.”
Adam Pressman, a partner and managing director at AlixPartners, added that “it is crucial to reach and influence customers via their preferred digital and physical channels during their sales journey, making the most out of every consumer interaction. While this may seem daunting to many retailers, they need to identify and prioritize key use cases and sales journeys and keep in mind that when exposed to the right content and products from a brand about one-third of consumers, according to our survey, will immediately convert. Retailers will also have more time this year to fine-tune promotional strategies. Only 38% of consumers in our survey said they intend to start their holiday shopping before Halloween this year, down from 46% in our 2022 survey and 53% in our 2021 survey. But while retailers are making progress with personalization efforts, there is much work left to be done: 65% of consumers said they see little-to-no improvement in companies being able to provide relevant product recommendations.”
