Holiday Outlook 2024
The future looks festive: High tech meets high touch shopping
This year marks the 10th anniversary of our Holiday Outlook and its perspectives on consumer behavior and spending trends. As shoppers prepare for this holiday season, they’ll likely face a retail environment shaped by spending differences and evolving buying habits — a glimpse into trends that could continue to shape the market well into 2025.
Despite 59% of consumers saying that inflation will probably influence their holiday spending this year, overall spending is projected to increase by 7% to an average of $1,638 per shopper. But behind this growth lies a marked gap between those ready to splurge and those tightening their budgets.
In PwC’s 2024 Holiday Outlook survey, holiday shoppers tell us they’re embracing both digital innovations and traditional in-store experiences throughout the purchase journey. While home delivery remains dominant, alternatives like buy online, pick up in-store (BOPIS) are gaining ground, especially among Gen Z and millennials.
Different generations show distinct spending habits. Gen Z and millennials are leading the way in sustainable shopping, in self-gifting and in buying experiences over physical goods. In contrast, Gen X and baby boomers prefer convenience and practicality, often choosing gift cards and shopping in physical stores.
As retailers and consumers adapt to these shifting dynamics, the 2024 holiday season looks to be one of strategic spending, personalized experiences and technological integration. To understand how these adaptations might shape retail strategies for the year ahead, we surveyed 4,000 consumers about their priorities for the holiday season.
2024 holiday spending key themes
A tale of two holidays
Shoppers plan to spend an average of $1,638 on gifts, travel and entertainment this holiday season, marking a 7% increase from 2023 and a 15% jump from 2022. While this average suggests higher overall spending, individual behavior across income levels reveals a more nuanced story. While some consumers are spending more and others are cutting back, the numbers reflect both varied spending habits and the influence of inflation, which has driven up costs across the board.
Surprisingly, the divergence in spending has become increasingly apparent even as GDP is projected to grow at 3% in Q2 2024. Nearly three in 10 consumers (29%) plan to spend less compared to the 2023 season — up 10% from last year — expecting to spend just $776 this season. However, 26% are ready to spend more, allocating a considerable $3,076 (a 33% increase in budget from 2023). Notably, over one third (34%) of consumers earning more than $65K per year say they will spend more, while just one fifth (21%) of those earning under $65K say the same, suggesting that the bifurcation in spending patterns is correlated (though not entirely) with the bifurcation in income.
Millennials continue to drive overall spending, but Gen Z is rapidly flexing its economic muscle, with their holiday budgets growing by 59% over the past two years. In comparison, millennials cite a 22% increase, while Gen X and baby boomers plan to reduce their budgets by 9% and 6%, respectively, compared to 2022. Regional differences also appear, with the South experiencing a 29% surge in projected spend since 2022 (compared to a 15% increase in the West, 12% in the Midwest and 0.4% in the Northeast).
On par with last year, more than half of consumers (52%) who have not yet completed their holiday shopping plan to do so after Thanksgiving. This year, there’s a small uptick (3 percentage points) in consumers planning to shop on Black Friday.
While Gen Z leads in budget increases across the board, Gen X plans to scale back this holiday, especially on gifts and travel. Millennials are more likely to buy and receive experience-type gifts like excursions or classes, and they plan to allocate 20% of their overall holiday budget on entertainment.
Economic headwinds drive smart spending
Holiday spending is projected to rise by 7%, reflecting both an increase in consumer activity as well as the lingering impact of inflation and its elevated costs. While inflation has moderated from its 2022 peak of 8% to 2.9% in July 2024, the cumulative effect of price increases over recent years continues to influence spending patterns.
The result is that many consumers are approaching the 2024 holiday season cautiously, with more than half (57%) describing their financial situation as strained — either unable or struggling to pay monthly bills, or able to cover them with little left for savings, holidays or extras. Consumers are now more selective in their spending, with 85% considering cutbacks over the next six months, primarily in nonessentials like dining out, clothing and luxury items.
For many, the decision to cut back on nonessential purchases appears to be a strategy to prioritize holiday spending, allowing consumers to indulge where it matters most to them. This will present a challenge for sectors whose non-holiday revenues will now face increased pressure.
Many brands already find themselves in a tricky spot. High prices have eroded consumer loyalty and shoppers are increasingly switching to private labels and store brands. To reverse these trends in the coming years, brands will have to focus on strategic pricing and promotions as they ramp up their investments in innovation and focus on efficiency and cost reduction. From a market positioning standpoint, brands with more exposure to lower income consumers will have to focus on price to drive growth, while companies catering to higher income consumers will have more flexibility.
Meanwhile, price-sensitive consumers have grown more discerning and are adapting creatively. In addition to private labels and store brands, they’re increasingly trying resale/used products (45% versus 38% in 2023) and rental programs (31% versus 26% in 2023). The shift is particularly prominent among Gen Z and millennials and reflects a broader trend toward more sustainable and cost-effective shopping habits.
85% of consumers plan to cut back on discretionary spending
Gift cards reign supreme, with 65% of consumers planning to buy them as gifts for others this holiday season — potentially signaling a post-holiday retail boom. Their popularity has been consistent over the last decade, as 51% of consumers chose them as the top category to spend their money on during the 2015 holidays.
Gen Z unwrapped
Gen Z is the rising star of holiday spending. With an impressive 35% planning to increase their budgets, these shoppers are outpacing other groups, boasting an average spend of $1,752 (up 37% from last year).
As Gen Z continues to enter the workforce and increase their spending power, retailers are reshaping the in-store experience to cater to their digital-first preferences. Seventy-two percent of Gen Z consumers say that it’s important to have self-checkout technology in-store when doing their holiday shopping. They also note the importance of mobile payments (70%) and brand apps (68%), turning brick-and-mortar into a high-tech playground.
Social media isn't just for scrolling — Gen Z consumers value celebrity and influencer endorsements throughout their purchasing journey, with 40% of them citing that as an important factor when holiday shopping. This is notably higher than 28% of all consumers who say the same.
Gen Z's self-spending stands out, with 37% of their budget allocated to personal purchases — versus 32% of all consumers. In contrast, baby boomers plan to devote 29% toward personal purchases.
The magic of in-store shopping
Physical stores continue to play a crucial role in holiday shopping, in part due to their experiential appeal. Nearly one-fifth of consumers rank holiday displays and store atmosphere (22%), holiday-specific products (21%) and making an event out of the shopping trip (17%) as the top three factors influencing their decision to visit physical stores during the holiday season.
Consumers who plan to shop in stores more frequently than usual are big spenders too, averaging $2,307 compared to $1,297 for less frequent visitors. A substantial 63% of consumers who shop in stores more frequently than usual during the holiday season say that self-checkout technology and mobile payment solutions are important when doing their holiday shopping. Forty-eight percent place the same importance on just-walk-out technology. These preferences indicate a shift toward tech-enhanced shopping experiences, offering retailers opportunities to build loyalty and shape their future stores.
In line with last year, debit cards remain the most popular payment method consumers plan to use when shopping this season (65% versus 66% in 2023), followed by cash and credit cards. Gen Z and millennials, meanwhile, are more frequent users of mobile payment methods, like Apple Pay and Venmo.
Smooth sailing across channels
Holiday shopping is evolving, although in-store experiences and word-of-mouth still lead the product discovery phase.
When researching more information about an item, consumers shift their focus to online channels like search engines, brand websites, online marketplaces, social media and generative AI (GenAI) inquiries. This trend is particularly pronounced among Gen Z and millennials, who engage with multiple research channels more frequently than other generations. Gen Z leads the pack, with 50% using GenAI channels during this phase, compared to just 29% of baby boomers.
Comparison shopping is seeing increased engagement in 2024, particularly on online marketplaces, brand websites and in stores. Understandably, consumers anticipating financial pressures are significantly more active in this phase across all channels.
As the holiday season progresses, consumer channel preferences shift. Early sales, Black Friday and Cyber Monday drive online shopping, but a pivot toward in-store purchases occurs post-Cyber Monday through New Year's Day.
While 60% of all consumers plan to visit the stores in person to make holiday purchases, the top purchasing channel varies by generation. When asked which channels they anticipate using when purchasing items, 66% of baby boomers opt for visiting the stores in-person, while Gen Z and millennials are more likely to embrace mobile brand apps for purchases.
Qs: When are you planning to do the majority of your holiday shopping? (Select one.) At the previous question you indicated you will do most of your shopping
Source: PwC Holiday Outlook 2024
Base: Consumers who have not yet completed their holiday shopping 3,887
Men boost holiday budgets for tech and travel
Women were the headliners with their holiday spending surge last year. This season, male shoppers are set to outspend their female counterparts, with a projected 13% increase in holiday budgets. What are they buying? Fifty-eight percent of men plan to buy footwear as gifts for themselves, followed by electronics (55%) and video games (51%). When it comes to buying for others, men are much more likely to gift home appliances (28%) than women planning to do the same.
Men aren’t just shopping — they’re also more likely to hit the road. A striking 53% of men plan to travel, compared to 40% of women, with 9% of men eyeing international destinations. And when it comes to tech-savvy shopping, men are leading the charge. They’re more excited about in-store digital services like just-walk-out tech and VR experiences.
While women still dominate the discount shopping scene, men are making their mark in specialty stores like home improvement, sporting goods, electronics — and liquor stores.
Tech-savvy travelers seek savings and sustainability
Holiday travel plans remain steady, with more than four in 10 (46%) US consumers hitting the road or skies this season, primarily for leisure, within the country. Travelers are leveraging their loyalty, with many using reward redemptions for bookings.
More than half of travelers (56%) are opting to stay with friends and family, a significant increase from 2023. This cost-effective option is particularly popular among those feeling the economic pinch, with 63% of consumers who plan to spend less this holiday season and 65% of baby boomers choosing this accommodation.
For those choosing to stay at hotels or rental properties, however, tech continues to transform the travel experience. Contactless hotel check-in, keyless room entry and online booking are high on traveler wish lists, streamlining their journeys from start to finish.
39% of consumers who plan to travel within the US and 50% who plan to travel internationally during the holidays plan to spend more overall — on gifts, travel and entertainment — throughout the season compared to all other consumers.
Levels of concern around travel have dropped compared to 2023
Home delivery prevails, but alternatives gain ground
Home delivery remains the top delivery method for 82% of consumers when shopping online for the holidays, consistent with last year. Preferences, however, vary significantly across generations and locations. While 89% of baby boomers plan to use home delivery, nearly half of Gen Z (49%) and millennials (48%) are opting for in-store pickup, blending digital convenience with physical retail experiences.
Urban dwellers are embracing diverse options, including work delivery (15%), off-site pickup points (22%) and personal shopping services (19%). Hassle-free returns have become a crucial factor in retailer choice, especially for baby boomers, who prioritize easy (86%) and free (73%) return options.
Product safety and quality is most important to consumers. Nearly two-thirds (64%) of Gen Z and millennials, however, are likely to buy gifts that support a cause, compared to 55% overall.
CMOs: Navigating the economic divide
CMOs face the complex task of addressing diverse consumer segments in 2024’s uncertain macroeconomic environment. With overall holiday spending up 7%, specific segments are cutting back — particularly on non-holiday-related purchases. This presents a challenge for retailers outside the holiday category, as they feel the impact of reduced discretionary spending. The key for CMOs will be navigating the widening gap between budget-conscious shoppers and big spenders by tailoring strategies to meet the needs of both groups without losing momentum in the broader market.
Gen Z’s 59% budget surge over two years demands strategic focus. CMOs have an opportunity to connect with these consumers by investing in mobile-first campaigns, shoppable social media content and AI-powered personalization. These tactics can drive engagement and conversions among this digitally native, high-spending cohort.
At the same time, economic pressures necessitate a dual focus on value and premium offerings. CMOs should work with their C-suite counterparts to determine if and where savings can be passed along to consumers this year. The goal here is to meet the varied spending abilities of each generation.
Consumer spending intentions have evolved significantly since 2015. The proportion planning to spend less has nearly doubled to 29%, while those intending to spend more has decreased to 26%. This shift signals a more cautious market, requiring businesses to refine their value propositions and adapt strategies to capture diverse consumer segments.
Tomorrow’s tidings: Blending tech and tradition for the year ahead
The 2024 holiday season is set to bring a dynamic mix of challenges and opportunities, offering a view into trends that could define spending behavior in the months to come. As consumers adjust their spending due to economic pressures, retailers are called to adapt. From AI-assisted shopping to seamless omnichannel experiences, technological integration is essential to keep up with shopping innovations.
This holiday season and beyond, success will likely hinge on offering value, personalization and memorable experiences — both in stores and online. For brands that can strike the right balance between innovation and tradition, the 2024 holidays are expected to be merry and bright.
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