Holiday Outlook 2023

Shoppers want everything everywhere … all at discounts

Consumers are on the hunt for deals this holiday season. Most will browse first in stores. To fine tune their choices, they will turn to a variety of online options — search engines, online marketplaces, brand sites and social media. Then, a combo of store and online to finalize and buy.

Some — especially young male high-earning consumers in metro areas — are particularly interested in using a variety of emerging technologies such as generative AI (GenAI) and chatbots to help sleuth out the right gift.

Cued by consumers’ propensity for online search, retailers are prioritizing emerging tech by embedding AI and GenAI into their business models — acutely aware that shoppers demand a seamless combination of digital and physical options to choose, compare and buy gifts.

To find out what matters to them, we asked some 4,000 consumers to estimate how much they plan to spend this holiday season, as well as when and where they will shop and travel. Here’s what they told us.

A season of giving . . . and going

Consumers will increase spending by a healthy 7% this year, allocating an average of $1,530 for gifts, travel and entertainment. The summer travel boom
will continue into winter, with travel-related spending increasing a robust 12% over the 2022 holiday season.

Almost 40% of consumers will spend more overall than they did last year. Those with household incomes of $120,000 or more will exceed an average of $3,000. Other big spenders include newer generations of shoppers, travelers and emerging tech users.

Why it matters: Accelerated by the pandemic, tech investment in hospitality continues to pay off. While hospitality will always require a human touch, consumers are increasingly coming to value the tech-assist.

Gen Z flexes its spending muscle

While millennials — many in their peak earning years — are still at the top of the holiday spending heap, Gen Z consumers (17-25 years old) are on the cusp of expanding theirs. They will spend $1,275, 15% more than 2022 and the widest percentage increase of any age group.

Gen Z likes to browse for gift ideas in stores (67% v 58% overall) and on social media (41% v 31%). They also prefer social media for comparison shopping (34% v 27%) and learning about sustainable companies (70% v 51%). Mobile payment is their speed (35% v 21%).

Why it matters: Gen Z consumer loyalty is available for brands to cultivate. While they don’t belong in large numbers to customer loyalty programs, those who do belong outperform other age groups.

Gen Z shopper insights

Emtech brings the sparkle

From GenAI gift advice to virtual customer service interactions, a few diehard enthusiasts are embracing emerging tech retail help. While they represent a scant 20% of consumers, more than half earn over $65,000. (Consumers at that income level will spend an additional 20% this year.)

These extended reality fans will spend more than twice the average consumer on entertainment. They are also partial to wellness-related products. Another 20% of consumers told us they may use emtech help in the future while 19% don’t know enough about it.

Why it matters: Take advantage of the opportunity to educate the almost 40% of consumers who either don’t know enough about emtech options or would consider using them in the future.

Insights on the emtech shopper

Women step up holiday budgets

Female shoppers will spend 11% more this year than they did in 2022, continuing the trend of boosting the economy that they started over the summer — with record-breaking attendance at movies and live concerts.

Laser-focused on value, they scout deals more than their male counterparts. They also care more deeply about price, free returns, convenience and speed. While they buy gifts for others more than men do (49% v 41%), they themselves prefer receiving gift cards over all other options.

Why it matters: Women are not as brand-loyal as men (59% v 67%). Rather, they are open to switching loyalties based on the values they deem important.

Female shopper insights

Squeezed by ongoing price increases, consumers hunt for deals

More than 75% of consumers are on the hunt for deals this holiday, as part of their effort to counteract price increases. Aware that a pre-season of holiday deals is increasingly becoming the norm, they are biding their time while waiting for the best deals.

Most will do the bulk of their shopping in early November while some will hold out for Black Friday sales. Meanwhile, those who plan ahead have already stocked up on gifts during ongoing midyear sales because they found what they wanted at the right price.

Why it matters: Consumers want discounts to counteract steadily increasing prices. Finely tuned to these sentiments, retailers are flattening timelines for holiday sales.

Home delivery dominates online shopping

Across generations, home delivery remains widely popular. Meanwhile, in-store and curbside pickup have stabilized, after a bump during the early years of the pandemic. Ultimately, consumers want to be able to select a combination of physical and digital channels for each shopping trip.

Shoppers want the certainty of knowing their orders will arrive as promised. Proof-of-delivery (83%), easy-to-use tracking (80%) and flexible delivery times (68%) are priorities. For pickup, stores close to home and convenient curbside options matter.

Why it matters: Retailers are well advised to shore up digital supply chains to better serve channel-shifting consumers who want a plethora of options for delivery and pickup.

Travelers want tech-enabled convenience

Holiday travelers (47% of all consumers — similar to last year) are embracing tech, from online booking to mobile check-in to biometrics. More than 60% are open to chatbot help. These big spenders ($2,562 total v $1,530 for all consumers) are youthful (millennials 61%; Gen Z 58%).

More than half will use online booking sites while a third will go direct to providers. Almost 60% will redeem rewards to book travel, further underscoring the importance of loyalty programs. Branded hotels attract 46% of holiday travelers while short-term rentals appeal to 22%.

Why it matters: Accelerated by the pandemic, tech investment in hospitality continues to pay off. While hospitality will always require a human touch, consumers are increasingly coming to value the tech-assist.

Insights on the tech traveler

Optimism with a dose of restraint

Lingering concerns about inflation notwithstanding, almost 80% of consumers will spend the same as or more than they did last year. This despite rising interest rates and the resumption of student loan repayments. Of course, they are also laser-focused on finding better deals.

Consumers did tell us they have been pulling back on discretionary spending: eating out, shopping for clothes, going to movies and concerts. Some are switching to non-branded products. More than in other years, they are looking for deals and discounts as they spread holiday cheer.

Why it matters: Consumers want a break from rising prices. They also want the warm buzz of a holiday shopping experience. Navigating that balance allows brands to stay competitive.

Putting the jolly in holiday

This holiday season, consumers want convenience, whether in stores or online. At the right price, of course. If they don’t find what they are looking for, they will go elsewhere. Savvy brands understand the importance of providing the multifaceted experience consumers seek.

More than ever, that experience includes a tech component. Even consumers not currently using emtech options want to know more. It’s up to consumer-facing companies to offer the human-powered, tech-enabled experience that keeps customers coming back — and attracts new ones.

Insights on shopper personas