As the holiday season approaches, new insights reveal that many shoppers in the United States are expected to tighten their budgets. According to the National Retail Federation, consumers plan to spend an average of $890.49 per person on gifts, food, and decorations this year. This figure marks a decrease from the $901.99 spent per person in the previous year.
The largest portion of this year’s holiday expenditures will be directed toward gifts, with anticipated spending of over $627.93 allocated for presents. This shift in consumer behavior highlights the growing financial pressures stemming from inflation, tariffs, and other economic factors affecting household budgets.
Economic Pressures Shape Holiday Shopping Trends
Research conducted by Bank of America reveals a “Tale of Two Wallets,” indicating that higher-income consumers are projected to make more purchases compared to those with lower incomes. The latter group is likely to shop earlier than usual, driven by the need to spread out expenses over several months. Mary Hines Droesch, head of consumer and small business products and analytics at Bank of America, stated, “A lot of the drivers of that is because of the need to spread out their expenses over several months, but also with concerns about tariffs.”
The ongoing government shutdown and persistent inflation are further compounding the challenges faced by consumers. Many are actively seeking deals this holiday season, prioritizing shopping at big box retailers and dollar stores rather than outlet stores or e-commerce sites.
Shoppers are also increasingly utilizing artificial intelligence tools to enhance their holiday shopping experience. According to Bank of America Institute, approximately half of the respondents indicated plans to use AI tools for gift searches this year.
Retailer Strategies to Attract Budget-Conscious Shoppers
In response to changing consumer habits, retailers such as Nordstrom and Wayfair are implementing pre-Black Friday promotions. These deals include discounts on cookware, Christmas trees, and clearance items to help customers manage their holiday spending more effectively.
Droesch noted that popular categories for consumers this year include electronics, clothing, and gift cards, which provide flexibility for the recipient. Additionally, Gen Z shoppers are leaning towards affordable, pre-owned items and alternatives that do not strain their budgets.
“A product that is very, very similar in nature to a branded, more expensive item—that’s a great way for you to have a more affordable holiday budget,” Droesch explained, emphasizing the appeal of secondhand goods among younger consumers.
As holiday shopping gains momentum, grocery stores are also rolling out seasonal savings on Thanksgiving essentials, allowing families to celebrate without overspending. This focus on affordability reflects broader trends in consumer behavior as people navigate a challenging economic landscape.
With these shifts in spending habits, it remains clear that the 2023 holiday season will be marked by cautious spending, as Americans aim to balance their holiday joy with financial responsibility.
