Holiday Outlook 2021
Consumers are ready to celebrate this year. They want to shop and travel and make merry after more than a year of various forms of pandemic-related abstinence. They’re still wary about public-health considerations in the wake of the variants. But for many, the vaccine has offered more freedom to participate in the activities they associate with the most wonderful time of the year.
In fact, overall trendlines are up this holiday, with only a small percentage of consumers—less than 20%—telling us the pandemic could significantly dampen holiday spending. To find out more about consumer expectations and intentions for the season, we asked 1,000+ consumers where and when they will shop and travel—as well as what drives their purchasing decisions.
With savings on the rise over the past year, almost 40% of all consumers—and close to 60% of consumers 55 and older—told us the pandemic would not affect their ability to spread holiday cheer this year. And 30% of consumers overall (as well as 40% of millennials) told us they will spend more this holiday than they did last year.
Consumers will spend an average of $1,447 on gifts, travel and entertainment this year—up more than 20% over last year when the pandemic ground most holiday travel to a standstill. However, spending is even up 13% from the 2019, pre-pandemic season, as consumers seek respite at the holidays.
In fact, after a 2020 holiday season of self-deprivation, consumers plan to pamper themselves this year: They will spend an average of $442 on themselves this holiday, up 48% from 2020 and 28% from 2019.
Consumers want to combine a variety of online and in-store options this holiday, based on the combination of factors they value most: price, speed, convenience. Consumer-facing companies are bolstering digitally enhanced supply-chain capabilities to deliver what consumers seek.
With an average budget of $1,646 (vs $1,447 for all consumers), millennials (ages 26-39) will spend the most this holiday season. In fact, just over 20% of them told us the pandemic actually had a positive impact on their holiday budgets; lockdowns and economic uncertainty in 2020 generated a boost in savings for many high-earning professionals.
More likely to shop by smartphone than consumers overall, millennials also favor in-store pickup more than other age groups. They are more interested in shopping with environmentally and socially responsible brands than other age groups, and prefer to use social media to seek out information about a company’s environmental, social and governance (ESG) practices (66% vs 49% for all consumers). They are also eager to travel this holiday.
Consumer-facing companies are carving out space in physical stores to accommodate in-store pickup and convenient, cost-effective returns for online purchases—both of which are highly valued by millennials. The willingness of millennial consumers to experiment with a variety of brands over the past several months illustrates that their brand loyalty can be elusive—but an exceptional customer experience can keep them coming back.
For some consumers, especially high-earning professionals, the pandemic boosted savings rates. Big spenders this holiday are city-dwellers younger than 45, most of whom earn above median household income ($65,000) and aren’t as price-conscious as other groups. They plan to travel this holiday. Loyal to environmentally sustainable brands, they prize speed and convenience during holiday shopping. Conversely, price dominates purchasing decisions for value shoppers, who tend to live in suburban or rural areas, earn less than $65,000 in household income and are unlikely to travel this holiday.
More than a quarter of Gen Z consumers (26%) told us the pandemic will significantly dampen spending this holiday.
The pandemic served to shine a spotlight on existing fissures in disposable income: Consumers with household incomes of $150,000 and more will spend almost double the average this holiday: $2,733 (vs $1,447 for all consumers).
No matter their budget, consumers want a respite from the last several months of anxiety and uncertainty. Getting to know their differentiated preferences can help consumer-facing companies understand specific holiday shopping needs. Price-sensitive shoppers are increasingly using a range of buy-now-pay-later options.
Lingering public-health considerations have consumers—especially millennials—making fewer, more targeted shopping trips this holiday season and continuing to stay closer to home. More than half of all consumers told us they would:
As they do every year, shoppers underscored again this year that price is the primary factor driving their holiday shopping decisions, followed by convenience and speed of delivery or availability for pickup. Price and convenience are even more important to baby boomers than to other age groups.
Almost half of all consumers (46%) told us they would use contactless options for more of their holiday shopping this year.
Innovative partnerships—such as Disney locations within Target stores, Sephora within Kohl’s and Toys “R” Us within Macy’s—allow consumer-facing companies to cater to consumer preferences for fewer, more targeted holiday shopping trips. The convenience of fewer trips might well be a determining factor that supersedes price.
Consumers told us they will do more of their shopping online (57%) than in stores (43%) this year, a slight leveling off from last year when the split was 61% to 39%—before vaccinations provided a measure of relief.
While home delivery is ubiquitous, with 90% of consumers saying they will use it for online purchases this holiday season, curbside pickup continues its upward trajectory: 44% will use curbside pickup this year, up from 35% in 2020 and 23% in 2019.
At the height of the pandemic, curbside pickup offered consumers a safe, convenient alternative to in-store shopping. Having become accustomed to the speed and convenience, consumers are making it part of their overall shopping routine.
In fact, speed is a major reason for the popularity of curbside pickup: Almost two-thirds of shoppers (64%) told us they expect to pick up the items they order online by the following day at the latest, whereas only 27% expect the same speed for home delivery.
Millennials favor in-store pickup more than all age groups (72% vs 61%) while Gen Zers prefer pickup at a designated location (50% vs 33%).
Curbside pickup is a win for consumers because they can pick up online orders sooner, rather than waiting for home delivery. It’s a win for retailers because they can save on shipping costs by using stores as fulfillment centers, while adjusting their workforce to include more staff to stock and pick products. This approach is part of a digitally enhanced omnichannel strategy that aims to reduce the footprint of stores that currently serve as showrooms.
More than ever before, brand trust matters to consumers: An overwhelming 92% of them told us it is top of mind during holiday shopping, a remarkable increase over the 70% we’ve recorded in previous years.
In an environment in which shoppers care about public health issues when they shop in stores and cybersecurity and privacy issues when they shop online, brand trust is in much sharper focus this year.
And who better to trust than someone you know? Especially someone who will continue to keep your community economically vibrant: 85% of shoppers said local stores and independent retailers will figure prominently in their purchasing decisions.
Given that business is seen as the only institution that is both competent and ethical, according to the 2021 Edelman Trust Barometer, retailers are well-positioned to fulfill the promise of trust that consumers seek.
The vast majority of consumers (80%) told us that their trust in consumer-facing companies has stayed the same or increased in the wake of the pandemic.
Every touch point with a consumer offers an opportunity to build trust. Retailers are able to nurture trust by offering reliable products and services, often private-label brands that secure a loyal following. They also provide a secure digital and physical environment, convenient shipping and return options, customer service provided by digitally savvy associates who are well-versed in the company’s offerings and brands that stand with their customers on environmental and social issues.
Closely linked to brand trust in consumers’ minds are a company’s environmental, social and governance (ESG) business practices. Consistent with other PwC analysis, the majority of holiday shoppers (76%) told us they favor companies with a strong ESG commitment.
The range of practices that consumers care about—and support with their wallets—include:
Younger consumers are even more committed to ESG, with 83% of millennials seeking out environmentally and socially responsible retailers (vs 76% for all consumers). Meanwhile, D&I is of particular importance to 80% of consumers ages 39 and younger (vs 72% for all consumers).
How do they find out about a company’s ESG practices? Most younger shoppers (66% of millennials and 70% of Gen Z) look to social media for ESG information on brands. Social media remains ahead of other channels in all age groups—almost half (49%) of respondents told us social media is their go-to channel followed by a company’s website (43%) and traditional media (30%).
More than three-quarters of consumers (76%) told us they would discontinue a relationship with a company that treats the environment, employees or the community in which they operate poorly.
Consumers want to support brands they can identify with and believe in, including brands created by diverse founders as well as size-inclusive models displaying products. They are eager to hear a brand’s ESG story, with all age groups (but younger people in particular) typically seeking it out on social media. This consumer preference gives retailers the opportunity to tell their ESG story close to the point of sale, since many younger consumers take advantage of social commerce options. Companies can start by evaluating their ESG and D&I metrics.
In past years, our data revealed that roughly a third of the population traveled during the holidays, most to visit family and friends. That held true even last year when holiday travelers swapped air travel for road trips using personal vehicles.
This year, however, more than half our survey respondents (52%) told us they will travel. Most will travel by car (72%). A sizable minority (40%) plans to travel by air (57% for those with household incomes above $150,000).
When we asked consumers earlier this year, 70% told us they favor vaccination verification while traveling. And more than half (56%) support policies that would prevent those without proof of vaccination from traveling.
Most travelers will stay with family or friends or at branded hotels this holiday. Millennials favor branded hotels while Gen Zers prefer short-term rentals.
Travel recovery remains in flux. With different consumers feeling different levels of comfort, a broad-brush approach to reaching potential customers won’t work. Demand intelligence tools can help assess leading indicators of travel.
Almost 60% of consumers told us they are concerned about the lingering effects of the pandemic and variants. A smaller group (slightly over 40%) is concerned that inflation worries might crimp holiday spending. Meanwhile, inflation is already showing signs of cooling off.
Regardless of these external factors, consumers are optimistic about holiday activities this year, including shopping, travel and entertainment. They are primed to spend more than they did last year—as well as more than they did in pre-pandemic 2019. High-income households are particularly ready, having boosted their savings over the last several months.
Consumers are clear about their intentions to support brands they can believe in, especially younger consumers who seek social and environmental information about their favorite brands on social media. Monitoring public-health data, consumer-facing companies are adjusting their omnichannel strategies to serve customers with whatever combination of online and in-store shopping they prefer this holiday.
Consumer Markets Sector Leader, Cyber, Risk & Regulatory, PwC US
US Hospitality & Gaming Advisory Lead, PwC US