Most consumers won’t tighten their budgets this holiday season.
According to The NPD Group’s 2016 Holiday Purchase Intentions Survey, released Monday, shoppers anticipate spending an average of $636 on holiday gifts, up 3 percent from their predictions last year. Additionally, only 12 percent of consumers said that outside factors, such as the economy, will impact their holiday purchases in 2016, compared to 14 percent in 2015.
“Consumers are ready to spend this holiday season,” NPD’s chief industry analyst, Marshal Cohen, said. “However, more than ever before, how much they spend will be determined by their own perception of the products and promotions they are presented with, rather than the simple fact that the products and promotions are there.”
Despite the fact that 16 percent of shoppers planned to spend less during the 2015 holiday season, more than 20 percent of shoppers said that they went above their holiday spending limits last year. Some of these consumers are planning to cut back on gifts for the upcoming holiday season, due to existing debts. Fifty-seven percent of consumers used credit cards to buy holiday presents in 2015 and 22 percent of these consumers reported that they still are paying off their holiday purchases from last year. More than a quarter of these consumers said they will not spend as much for the 2016 holiday season.
On the upside, 20 percent of shoppers have already begun their holiday shopping this year, which provides much insight about their purchasing habits as well. For the 2016 holiday season, earlier shopping will align with greater spending. More than a quarter (27 percent) of consumers planning to spend $750 or more have already started buying gifts for the holidays. This is slightly higher than mid level spenders (24 percent) expecting to spend $300 to $749 and low spenders (17 percent) that predict spending less than $300 on presents.
Early shoppers may be spending more, but they are purchasing presents with a more cautious mindset. They are more likely to comparison shop on multiple commerce channels before buying gifts (45 percent compared to 30 percent of late shoppers), in addition to buying all their holiday presents at discounted prices (38 percent compared to 21 percent of late shoppers).
With consumers spending more on holiday gifts compared to last year, NPD predicts that the 2016 holiday season will also be a boon for retailers, particularly those with digital shops. Thirty-eight percent of consumers plan to conduct their holiday shopping online this year, compared to 33 percent in 2015 and 29 percent in 2014. Spending on product “super categories,” including apparel, beauty and toys, is also expected to increase during the 2016 holiday season.
“All signs point to a holiday retail season that will outperform last year’s,” Cohen said, continuing, “The unvarying holiday spending intentions expressed by consumers are a sign that even this year’s intense election cycle has done little to dampen consumer confidence going into the holiday season, which we forecast to grow moderately.”