K-shaped recovery contours holiday shopping

Holiday Outlook 2020: November edition

How has the pandemic affected holiday budgets? Unevenly. Almost 40% told us it's business as usual, while a small sliver (11%) have increased their holiday budgets. Meanwhile, the other half isn't doing so well.

Our survey results reflect the larger economy’s uneven K-shaped recovery, in which some sectors are thriving while others continue to flail. Overall, while consumers are more optimistic than when we first polled them a few months ago, they are still wary.

To better understand a shopping environment that is more bifurcated than ever before, we asked 1,000+ consumers nationwide about their plans for holiday shopping and dining.

Impact of COVID-19 on holiday spending: Better or worse?


Source: PwC Holiday Outlook 2020
Q: What has been the impact of the COVID-19 pandemic on your spending capabilities for the holiday season this year?
Base: All respondents 1,010; Gen Z 154; Millennials 242; Baby Boomers 320

Expect overall spending similar to last year

When we first asked shoppers about holiday spending back in August, they were far more cautious, telling us they would spend 12% less this holiday than they did last year. By October, they seemed much more buoyant, with spending levels down less than 3% from last year. In fact, spending on gifts matches last year’s levels as spending on travel and entertainment dip.

Buoyant spirits lift consumer spending . . .

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: 2019: 2,017, Oct 2020: 1,010
... with spending on gifts similar to 2019 levels
October 2020
2019

Total spend ($)
Gifts ($)
Travel ($)
Entertainment ($)

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? This includes gifts, travel and entertainment
Base: 2019: 2,017, Oct 2020: 1,010

Millennials will spend more than last year 

Pandemic or not, almost a third of millennials (30%) plan to spend more this holiday than they did last year, at close to double the rate of consumers overall.

More than most other age groups, these 25-to-38-year-olds will combine in-store and online shopping on Black Friday while close to half of them will look for online-only deals on Thanksgiving Day. 

They will tailor their shopping habits based on shipping policies but they’re also far more likely than shoppers overall to pay for return shipping if they can avoid an extra trip to the store (45% v 27%).


Implications

Convenience matters most to these savvy shoppers. Give them the choice so they can combine the best of physical and digital shopping.


Millennials are primed to celebrate


Source: PwC Holiday Outlook 2020
Base: All respondents 1,010; Millennials 242

Black Friday still holds mystique

About one-quarter of consumers (24%) have already begun their holiday shopping. And a very diligent sliver (3%) is all done (before Prime Day).

The majority (59%) meanwhile, won’t begin until November or December. And more than two-thirds (67%) will wait to finish shopping until Black Friday week or the week after.

During Black Friday week, Black Friday itself holds the most appeal: 36% will do the bulk of their shopping that day, some online, some in stores and some using a combination of both.

The typical Black Friday shopper is omni-channel — young and digital-savvy with disposable income to spare, who trusts the security of online transactions and lives in a small town or suburb.


Implications

Even though deals abound earlier and earlier — especially in our pandemic-altered world — for many consumers, holiday shopping in November and December continues to hold special appeal. Retailers have an opportunity to engage more closely with consumers at that time and reassure consumers that want to shop in store that appropriate safety protocols will be in place.

Almost 50% want to see what the weeks after Black Friday will bring

Start shopping


Already started
%
Before November (Sept/October)
%
Early November
%
Black Friday week
%
After Black Friday week through Christmas
%
After Christmas through New Year
%

Complete shopping


Already completed
%
Before November (Sept/October)
%
Early November
%
Black Friday week
%
After Black Friday week through Christmas
%
After Christmas week through New Year
%

Source: PwC Holiday Outlook 2020
Q: When do you plan to start and complete your holiday shopping this year?
Base: 1,010

In online shopping we trust

The vast majority of consumers (71%) told us they are confident their online transactions are secure this holiday season, likely because most already have basic security protections in place.

Interestingly, age seems to be proportionate to trust; Gen Z (17 to 24 years) shoppers tell us they are far less trusting of online interactions than consumers overall (49% v 71%). These young shoppers are also much more likely to shop in stores on Thanksgiving Day and Black Friday.

Regardless of their skepticism, however, Gen Z consumers have adopted online shopping for electronics, apparel, footwear and accessories at far higher rates than consumers overall, in the wake of shelter-in-place mandates.

Despite their lack of confidence in the security of online shopping, roughly one-third of Gen Z shoppers will buy electronics, apparel, footwear and accessories online this holiday — in the wake of COVID-19 shelter-in-place mandates — compared to less than a quarter of consumers overall.

Implications

Consumers are confident that retailers have the security measures in place for secure online shopping. And even those who tell us they aren’t are still migrating online at higher rates. Invest in the infrastructure needed to bolster the accelerated pace of online shopping.

High overall confidence in online shopping security;
less so with Gen Z

Source: PwC Holiday Outlook 2020
Q: How confident are you that your online transactions are secure throughout the holiday season?
Base: All respondents 1,010; Gen Z 154; Millennials 242; Gen X 228; Boomers 320; Greatest Gen .66

Can I return this for free?

As consumers do more of their shopping online this holiday (61% v 39% in stores), return policies take on even more importance. In fact, more than half of all consumers (53%) make buying decisions based on return policies.

And of all the age groups, millennials (25-38 years) are hyper-focused on return policies.

In the wake of shelter-in-place mandates, they’re migrating online to buy apparel, footwear, accessories and electronics at higher rates than older shoppers. This holiday, they also anticipate having more returns than last year: 40% v 20% for all consumers.

Millennials anticipate returning items this holiday at double the rate of consumers overall.

Implications

Free shipping and returns are now a competitive differentiator for retailers. As is the convenience of omnichannel returns: Buy online, return in-store. And while there, maybe do a bit more shopping. With that in mind, retailers are well-advised to adopt protocols for safe, convenient in-store returns.


Returns influence where consumers shop, especially millennials


Millennials
Overall

A return policy affects my choice of retailer
%
%
I plan to return unwanted items in-store to save money on shipping
%
%
I order multiple sizes/colors of an item when return shipping is free
%
%
I do not mind paying a return fee to skip going to the store
%
%
I am likely to have more returns this year compared to last year
%
%

Source: PwC Holiday Outlook 2020
Q: To what extent do you agree or disagree with the following issues related to returns?
Base: All respondents 1,010; Millennials 242

Virtually home for the holidays

While 20% of consumers plan to hold virtual gatherings with family and friends and another 20% haven’t made plans yet, a larger group (41%) told us they will either visit others in their homes or host a gathering in their own home.

Meanwhile 54% plan to dine at a restaurant this holiday, with younger consumers dining out at higher rates: 70% of millennials (25-38 years) and 69% of Gen Z (17-24 years).

Younger consumers also plan to celebrate the holiday in public spaces at higher rates: some 20% of those aged 38 or younger (v 7% for the over-38 set).

Some 20% of consumers aged 38 and younger will attend holiday parties in public spaces this year (v 7% for the over-38 set).

Implications

Despite the constraints of a global pandemic, consumers — especially younger consumers — want safe options to celebrate with family and friends.


A sizeable minority (41%) will celebrate in homes


I will be staying at home to celebrate the holiday season this year
%
I will be visiting others in their homes
%
I will be hosting family and friends at my home
%
I will be celebrating virtually with family and friends
%
I will be attending holiday parties in a public place
%
None of the above
%
I am not sure yet
%

Source: PwC Holiday Outlook 2020
Q: Which of the following best describes your social plans for the upcoming holiday season?
Base: 1,010

Coming in from the cold

We enter the throes of the holiday shopping season in the midst of major intersecting events: a public-health crisis, economic uncertainty, lingering social unrest and an election year.

Consumers are understandably ready for a touch of retail therapy that provides at least temporary respite from the chaotic reality of everyday life — whether online from the comfort of their homes or in a safe, festive shopping and dining environment.

Retailers, meanwhile, are monitoring the latest public-health data as they continue to navigate the pandemic and its impact on consumer confidence and shopping preferences. Ultimately, a bifurcated, K-shaped recovery means some shoppers are ready to spend while others are holding out for the best value this holiday.

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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