With travel and entertainment interrupted, this holiday is all about gifts

Holiday Outlook 2020: December edition

The pandemic and its resulting economic implications continue to ripple out unevenly into holiday budgets. More than half of baby boomers experienced no economic impact at all while some 20% of millennials are upbeat. Still, almost half of all consumers are feeling some economic pain.

Consumers express more optimism now than they did when we first polled them a few months ago. But they’re still wary, given widespread economic uncertainty. To better understand this fragmented shopping season, we asked almost 500 consumers nationwide about their plans for the holidays.

Doubling down on gifts this holiday

Consumers told us in November that they plan to spend approximately 7% less than they did last year — an average of $1,194 — likely the result of increasing COVID-19 spikes and ensuing shutdowns combined with little hope of federal economic relief on the horizon.

They do, however, plan to spend 9% more on gifts than they did last year, as many families put plans for travel and gatherings on hold. And they will be more generous with those outside their immediate circle of family and friends, perhaps recognizing the importance of those essential to daily life in the midst of a pandemic. In fact, consumers will spend 16% more on people outside their circle of family and friends. Pets also take pride of place this holiday, with spending increasing 21% over last year.

Overall, consumers are less positive than they were in October but more than they were in August, when we first asked about their intentions for holiday shopping, reflecting an uncertainty that continues to reshape the economy at large.


Holiday budgets reflect economic uncertainty . . .

Source: PwC Holiday Outlook 2020
Q: Thinking about the forthcoming 2020 holiday season, how much in total do you plan to spend on others and yourself?
Base: 2018 = 2,071; 2019 = 2,017; Aug 2020 = 1,023; Oct 2020 = 1,010; Nov 2020 = 489.

. . . while spending on gifts increases by 9%

Source: PwC Holiday Outlook 2020
Q: Thinking about the forthcoming 2020 holiday season, how much do you plan to spend on gifts?
Base: 2017 = 2,397; 2018 = 2,071; 2019 = 2,017; Nov 2020 = 489.


The magical lure of free shipping

Free shipping ranks as the most decisive element of brand loyalty by far: For more than two-thirds of consumers (68%), it matters more than free samples, loyalty programs and curbside pickup.

And close to half of all consumers (42%) told us free shipping is of significant importance to their purchasing decisions.

While younger consumers find it less of a draw — and are also more interested in free samples, curbside pickup and early access to sales and new products than older shoppers — free shipping still holds pride of place across all age groups.

By almost 2 to 1, free shipping outranks other benefits for significant impact on purchasing decisions. Meanwhile, curbside pickup and premier access to new products rank 10 or more percentage points higher for younger consumers.

Implications

Consumers make no bones about their preference for free shipping. Retailers who deliver have a clear competitive edge.


Free shipping outranks all other benefits . . . *


Free shipping
%
Discounts for future purchases (loyalty program)
%
Free samples with minimum purchase
%
Premier access to sales and new products (loyalty program)
%
Curbside pickup
%
Direct brand interaction via social media
%
Auto-restock services
%
Subscription services
%
One-click social-media purchases
%

*significant + moderate impact on purchasing decisions

Source: PwC Holiday Outlook 2020, November edition
Q: To what extent would the following positively impact your loyalty towards a retailer or brand?
Base: 489



. . . despite differences among age groups*

All
Age 17-38
Age 39+

Free shipping
%
%
%
Free samples with minimum purchase
%
%
%
Discounts for future purchases (loyalty program)
%
%
%
Premier access to sales and new products (loyalty program)
%
%
%
Curbside pickup
%
%
%

*significant impact on purchasing decisions

Source: PwC Holiday Outlook 2020
Q: To what extent would the following positively impact your loyalty towards a retailer or brand?
Base: All respondents = 489; gen Z + millennials = 197; gen X + baby boomers + greatest gen = 292


The grinch who stole brand loyalty

The biggest deal-breaker for consumers? Long lines for in-store shopping, which is what consumers have told us for several years now.

This year, the vast majority (78%) again identified long lines, underscored by health-related capacity restrictions in a COVID-19 environment. Still, 45% said they would stay loyal, shopping online instead, while 32% would switch brands.

For online shoppers, high shipping costs top the list of deal-breakers, followed by cybersecurity concerns.

Older consumers are far more sensitive to high shipping costs online — by a margin of 20 percentage points — than younger shoppers. With in-store shopping, long lines are by far the biggest deal-breaker.

Implications

In return for brand loyalty, consumers have come to expect a convenient, frictionless shopping experience that offers the value they seek.


Online deal-breakers


All
Age 17-38
Age 39+

High shipping costs
%
%
%
Compromised credit-card information
%
%
%
Items arriving late
%
%
%
Store credit (vs refund)
%
%
%

Note: These values represent % of respondents who ranked each option in their top 3 deal-breakers when shopping online.
Source: PwC Holiday Outlook 2020
Q: Which of the following are deal-breakers when it comes to shopping online with a brand in the future?
Base: All respondents = 489; gen Z + millennials = 177; gen X + baby boomers + greatest gen = 262


I want it now, say younger consumers

While Amazon clearly dominates online shopping — with 89% of consumers using the site for at least some holiday shopping — younger consumers are open to options outside the e-commerce giant.

Speed and flexibility matter. The ability to have an item shipped directly from a brand’s website as well as local stores and curbside pickup are among the reasons younger consumers say they’d switch loyalties to a different retailer.

Meanwhile, Amazon loyalists are just as likely as consumers overall to have increased their use of online shopping due to the pandemic.

Younger consumers are most likely to switch away from Amazon. They are also least likely to switch to Amazon once they’ve forged loyalty to a different brand.

Implications

Retailers that offer the best of online and in-store options are most likely to entice younger consumers, who are open to switching loyalties. Shipping capabilities also appeal to younger consumers for whom speed is a priority.


Speed and convenience could woo younger consumers away from Amazon

Source: PwC Holiday Outlook 2020
Q: Has the availability of any of the following shifted any of your holiday spending away from Amazon?
Base: All who shop with Amazon = 401; gen Z = 73; millennials = 95; gen X = 92; baby boomers + greatest gen = 141.


Expression of the season

With the pandemic interrupting travel and putting a halt to so many in-person visits this year, many of us will likely be turning to gifts as the best expression of the season. For retailers — whether online or in stores — the challenge lies in providing the best value tailored to shoppers’ specific needs, value that balances safety, price and convenience in the most uncertain of economic times.

Contact us

Tyson Cornell

Consumer Markets Industry Leader, PwC US

Allison Stone

Consumer Markets, PwC US

Krystin Weseman

Consumer Markets, Senior Analyst, PwC US

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