• by Sarah Mahoney  @mahoney_sarah, October 15, 2024

How happy the coming holidays are will likely depend on family income levels -- and this year, Deloitte’s forecast reveals unlikely big spenders: upper-middle-income shoppers.

And consumers are optimistic about what’s ahead. Overall, 43% of those surveyed, a sample of over 4,000, expect the economy to improve in the coming year, compared to 34% in last year’s survey. Among higher earning respondents, 47% believe things are on the upswing.

The annual survey, based on both consumer polling and input from retail executives throughout the industry, anticipates an 8% gain in spending, with people saying they plan to spend an average of $1,778 this holiday season. Because consumers are prioritizing experiences over gifts, that’s likely to amount to about $1,043 -- flat compared to 2023 -- in retail sales, as people focus more on things like experiences (up 16%) and home décor (up 9%.)

Overall spending will be flat for the wealthiest consumers, at $3,887 for those earning $200,000 or more. Ditto for lower earners, with spending stagnant at $1,548 for households with between $50,000 and $99,000.

The holiday heroes? Households with income levels between $100,000 and $199,000 say they are likely to spend 17% more, averaging $2,546 per person.

The Deloitte research detects other shifts as well, including a dip in self-gifting, rising investment in experiences and an increase in multiple “frugal” behaviors, even among those who are planning to spend more this year.

Deloitte says there is consistent evidence of restraint, even among those spending more, with 40% demonstrating at least five of the survey’s frugal behaviors. Those include a dip in self-gifting, falling to 32% from 48%. More consumers want to switch to cheaper brands (62%) and find more affordable retailers (48%). A larger number are planning to shop at Thanksgiving week sales events (68% overall and 79% of Gen Z).

Those finding may have especially merry implications for mid-level department stores, including Macy’s, Kohl’s and JC Penney – especially since middle-income shoppers have been reining in discretionary spending, especially apparel sales.

Retailers hope they’ve built the holiday marketing and merchandising strategies to win them over. Kohl’s is emphasizing selection, claiming twice the number of gift options, with more curated gifting displays throughout the store. The company is also offering new digital experiences such as an interactive Gifting Quiz, co-branded Pinterest x Kohl’s content and a custom gift board.

It’s also hyping its trademark sales events, including the return of the $15 for $50 Kohl’s Cash deals, starting early next month.

Macy’s, which is in the midst of downsizing its store fleet, is highlighting Toys R Us departments, focusing on the Top Toys list, as chosen by Geoffrey the Giraffe.