Holiday Shopping Rule of 3’s and Other Consumer Trends

By Trey Loughran

There’s no question that the holidays are a time of joy and celebration. However, for many they can also be a time of stress and anxiety, especially when it comes to personal finances. According to Purchasing Power’s 2023 Consumer Holiday Spending Survey, more than half (56 percent) of lower income U.S. consumers (those earning $75,000 or less annually) say they will struggle to afford gifts this holiday season.

This situation, however, isn’t a surprise to most. Most respondents surveyed (54 percent) shared that they save throughout the year to minimize the financial impact of holiday shopping. Yet, despite all best efforts:

40 percent say that holiday spending will put them in debt;
60 percent expect to carry this holiday debt beyond two months to three months; and
20 percent believe the debt will take more than six months to pay off.

To complicate matters further, this debt can last three times as long when there's an unplanned or emergency financial expense.

This doesn’t mean, of course, that consumers will avoid holiday spending altogether — 65 percent plan to spend the same or more on holiday shopping in 2023 as they did last year.

To help reduce financial stress this holiday season, consumers are looking at a handful of ways to cut costs and avoid starting the new year seeing more red than green. And as retailers continue rolling out their holiday season marketing strategies, they would be prudent to note and carefully consider the following trends they’re likely to observe this year.

The Price Check Rule of Three

According to the survey, more than a third (34 percent) of U.S. consumers plan on spending more than $1,000 on gifts this year, but the majority (57 percent) cite price as being the deciding factor when making holiday shopping decisions — well ahead of brand name, product quality or immediate availability. In fact, nearly seven out of 10 shoppers (68 percent) plan on spending $100 or less on individual gifts this holiday season.

Because consumers are taking extra care to find the right gifts at the right price, they’re on the hunt for the most competitive prices. The majority plan to check the price of large-ticket items at an average of three retailers, and 28 percent are willing to check up to 10 stores — or even more. Meanwhile, only 1.4 percent of consumers say that they won’t be price checking at all.

Sales Are Still Top of Mind

Holiday shopping sales events like Black Friday and Cyber Monday, including the promotional days surrounding these retail tentpoles, remain on consumers’ calendars as target dates for holiday shopping, with eight in 10 consumers planning to take advantage of these sales this year. Six in 10 (59 percent) plan on doing at least some of their shopping at this time, with 38 percent doing most or all of their shopping on these days.

Brick-and-mortar stores, however, should note that consumers aren’t as driven to go shopping in person on Black Friday:

40 percent do all of their Black Friday shopping online;
21 percent claim that it’s a great sale but not worth the effort; and
32 percent of consumers say they prefer Cyber Monday for the convenience of not having to go to a physical store.

However, consumer interest in sales isn’t limited specifically to Black Friday and Cyber Monday. Most consumers (81 percent) plan on taking advantage of sales events in general this holiday season. So, if you’re looking to increase foot traffic or e-commerce traffic, holiday sales and/or limited-time offers are a smart strategy.

Significant Shopping Continues Beyond November Promotions

Despite consumer interest and participation in traditional Thanksgiving sales and promotions, an overwhelming majority of consumers (92 percent) said that their holiday shopping will continue well into December, with 51 percent saying most or all of their shopping would be done that month.

This indicates that shoppers will remain on the hunt for holiday bargains and promotions to meet their gift-giving demands long after these now-traditional tentpole sales events. Even those who have already experienced unexpected financial emergencies will continue to pursue holiday giving, but with understandable adjustments.

This year:

53 percent plan to make fewer purchases;
48 percent will seek out less expensive gifts;
27 percent will limit the amount of people to purchase for; and
24 percent will explore gently used items from secondhand marketplaces.

Be Extra Customer Conscientious This Season

Consumers are taking extra care this holiday season to stretch their dollars as far as they can to purchase gifts for everyone on their lists, and retail leaders should take note. By staying keenly aware of changes to consumer shopping habits, their perceptions toward sales and secondhand markets as well as their financial situations, retailers can remain competitive while continuing to build customer loyalty.

Trey Loughran is chief executive officer of Purchasing Power, LLC, the leading employee purchase program offering consumer products/services as a voluntary benefit through the convenience of payroll deduction.