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Will this holiday sparkle? Consumers are ready to bring the shine

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.

1. You get a gift, and you get a gift . . . and I get a gift too

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. Even compared to the pre-pandemic 2019 season however, spending is up 13%, 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.

Holiday budget optimism rebounds . . . . . . with consumers poised to pamper themselves 2015 2016 2017 2018 2019 2020 2021 $1018 $1121 $1189 $1250 $1284 $1186 Note: Highest ranked choices from a list of 5 options Source: PwC Holiday Outlook 2021 Q: Thinking about the forthcoming holiday season, how much in total do you plan to spend on others and yourself in the following categories (including gifts, travel and entertainment)? Base: 1,020 Source: PwC Holiday Outlook 2021 Q: Thinking about the forthcoming holiday season, how much in total do you plan to spend on others and yourself in the following categories (including gifts, travel and entertainment)? Base: 2015 = 2,017; 2016 = 2,169; 2017 = 2,395; 2018 = 2,071; 2019 = 2,017; 2020 = 1,017; 2021 = 1,020 $147 Friends +6% vs 2019 vs 2020 +13% $762 Family vs 2020 +48% $442 Self +28% vs 2019 vs 2020 +29% +20% vs 2019 $1447

Key takeaway

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.

2. Spendy millennials power the uptick

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, they also favor in-store pickup more than other age groups. Eager to travel this holiday, they are more interested in shopping with environmentally and socially responsible brands than other age groups. Social media is their preferred venue to seek out information about a company’s environmental, social and governance (ESG) practices (66% vs 49% for all consumers).

Millennials put the jolly in holiday All consumers Average spend $1447 $1154 $1646 $1594 $1347 $1510 Gen Z Millennials Gen X Boomers Greatest gen Source: PwC Holiday Outlook 2021 Q: Thinking about the forthcoming holiday season, how much in total do you plan to spend on others and yourself in the following categories (including gifts, travel and entertainment)? Base: 1,020; Gen Z = 214; Millennials = 269; Gen X = 229; Baby boomers = 268; Greatest gen = 40

Key takeaway

Consumer-facing companies are carving out space in physical stores to accommodate in-store pickup and convenient, cost-effective returns for online purchases — both preferred by millennials. Consumers have already illustrated that brand loyalty can be elusive by their willingness to experiment with a variety of brands over the past several months; exceptional customer experience can keep them coming back.

3. Uneven recovery widens holiday budget gap

For some consumers, especially high-earning professionals, the pandemic boosted savings rates. Big spenders this holiday are city-dwellers younger than 45; most earn above median household income ($65,000) and aren’t as price-conscious. 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. 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).

More than a quarter of Gen Z consumers (26%) told us the pandemic will significantly dampen spending this holiday.

under age 45 plan to travel this holiday earn above $65K seek out environmentally responsible brands live in metro areas Who will spend more this holiday? 30% of consumers 72% 62% 41% 70% 45% Source: PwC Holiday Outlook 2021 Q: Compared to the 2020 holiday season do you think you will spend more? Base: 301

Key takeaway

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.

4. Fewer, more local stores

Lingering public-health considerations have consumers — especially millennials — making fewer, more targeted shopping trips this holiday season and hewing closer to home. More than half of all consumers told us they would:

  • Buy more from local and independent stores (56%)
  • Visit fewer stores than usual (55%)
  • Shop at stores with a loyalty program (53%)

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.

Note: Highest ranked choices from a list of 8 options Source: PwC Holiday Outlook 2021 Q: What are the primary influences that drive your holiday spending? Base: 1,020; Gen Z = 214; Baby boomers = 229 Top 5 factors driving holiday spending Baby Boomers: 88% Baby Boomers: 70% Gen Z: 45% 1 2 3 4 5 Price 75% 62% 48% 38% 35% Convenience Speed of delivery Recommendations from friends and family Free return options

Key takeaway

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.

5. Curbside pickup is here to stay

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 while slightly over one quarter (27%) expect the same speed for home delivery.

Millennials favor in-store pickup more than all age groups (72% vs 61%) while Gen Z prefers pickup at a designated location (50% vs 33%).

Curbside pickup almost doubles in popularity from 2019 Note: Highest ranked choices from a list of 7 options Source: PwC Holiday Outlook 2021 Q: When doing your holiday shopping online, which of the following methods do you plan to use? Base: Those who use online shopping: 2019 = 1,712; 2020 = 880; 2021 = 894 Home delivery In-store pickup Curbside pickup 90% 61% 44% 35% 23% 60% 81% 85% 2021 2020 2019 44%

Key takeaway

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 headed toward reduced store footprints serving as showrooms.

6. Trust takes center stage

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 where 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? 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.

In the context of business being the only institution seen as 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.

Brand trust is the #1 driver of purchasing decisions Brand trust 92% Local producers and stores 85% Environmentally and socially responsible brands 76% Note: Highest ranked choices from a list of 7 options Source: PwC Holiday Outlook 2021 Q: How important are each of the following when making your holiday purchase decisions? Base: 1,020

Key takeaway

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.

7. What does your brand stand for?

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 by shopping at those companies — include:

  • Diversity and inclusion
  • Labor practices of suppliers
  • Environmental impact of production and delivery

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,  diversity and inclusion (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. For all ages, social media is still ahead of other channels: Almost half (49%) tell 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.

Y our ESG story matters to consumers Socially and environmentally responsible retailers Labor practices of suppliers Environmental impact of production Environmental impact of delivery Retailer’s diversity and inclusion practices All consumers Millennials Gen Z 76% 75% 75% 73% 72% 83% 80% 84% 80% 80% 78% 75% 78% 80% 80% Source: PwC Holiday Outlook 2021 Q: How important are each of the following when making your holiday purchase decisions? Base: 1,020

Key takeaway

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, typically seeking it out on social media, especially younger consumers. 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.

8. On the road again

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 Z prefers short-term rentals.

Where will you go this holiday? How will you get there? Within my state Out of state Outside the US I don’t plan to travel I don’t know if I will travel 31% 26% 10% 12% 36% 13% Bus 40% Airplane 72% Car Millennials: 46% Boomers: 51% 57% of consumers with household incomes ≥ $150K Note: Multiple combinations possible for in-state, out of state and outside the US Note: For mode of transportation, highest ranked choices from a list of 9 options Source: PwC Holiday Outlook 2021 Q: Are you planning to travel this holiday? What mode of transportation will you use? Base: 1,020; Travelers = 535; Millennials = 269; Baby boomers: 268

Key takeaway

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.

Primed for a season of cheer

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: shopping, travel, 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.

Contact us

Barbra Bukovac

Mid-Central Region Vice Chairman, PwC US

Katrina Carrizales

Cyber & Privacy Partner, PwC US

Samrat Sharma

Principal, PwC US

Jonathan Kletzel

Private Company Services Advisory Leader, PwC US

Darin Yug

US Hospitality & Gaming Advisory Lead, PwC US

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