Walmart holiday ad
While consumers always keep stores busy through the long Black Friday weekend, new research from Deloitte finds that consumers plan to do more spending than in the past. On average, people will spend about 50% of their holiday budget this weekend, up from 43% last year. And that shift is present in every income category.
Rod Sides, Deloitte Insights leader, Deloitte LLP insights leader, tells Marketing Daily what this means for the retail landscape.
Marketing Daily: Consumers say they'll shop more intensely during the Black Friday and Cyber Monday weekend. About 80% of holiday consumers in this survey plan to shop at some point, compared to 71% in 2021.
And they expect to spend about $500 per person, a 12% jump from last year. Why the shift?
Rod Sides: It's because they're looking for bargains and the impact of inflation. Comparing these findings to data we released a few weeks back shows that total spending will be pretty flat, year over year. So if people want to make their dollars go further, they're looking for bargains. About 19% plan to shop on all three biggest days: Prime Day, Black Friday and Cyber Monday. Consumers are motivated to make those dollars go further.
Marketing Daily: Are you seeing this willingness to spend at all income levels?
Sides: Yes. The growth among lower-income shoppers, with those earning less than $50,000 a year saying they'll spend 19% more this weekend than last year, is interesting.
Marketing Daily: It seems people are determined to make the holiday happen, despite rising costs.
Sides: Yes, and that's where you get into the extension of credit, right? About 48% expect to use credit this year, versus 35% in 2021. And 37% plan to use "buy now, pay later" options, such as Klarna and Affirm. So folks are financing the holidays. They're also cutting down on the number of gifts. And gift card usage is up, which often happens in downturns. It's a way to manage budgets.
Marketing Daily: The credit usage is interesting, given the rising rates. Are people aware of the consequences?
Sides: The sentiment is very similar in back-to-school, where parents just bucked up and said, "We're going to do whatever it takes to make sure that the kids get started back to school in the right way." They'll worry about ramifications down the line.
Marketing Daily: How much will this demand for bargains hurt retailers?
Sides: They'll do what they need to do to win their share of wallet. And there's enough science in pricing algorithms that they understand the margins they have to have. The big question is the shift in consumer preference. And for department stores, it's their time to shine. The more significant issue is online shopping.
Marketing Daily: How so?
Sides: Stores have just had to add much more optionality. Consumers expect it. We expect about 63% of spending to happen online. And people buy online from department stores all the time. But if they're giving free shipping or an associate has to go through the store and then get it out to the parking lot for pickup, it's a very expensive service model.