A new survey from Boston-based L.E.K. Consulting and Civis Analytics has revealed the pandemic will result in reduced holiday shopping this year, with the average U.S. consumer reporting they're cutting their presents budget by 14 percent.
According to the survey, 44 percent of respondents said they had less disposable income in 2020 than in 2019 as a result of the pandemic, and 43 percent cited general concern about their overall finances and income security. The average expenditure on holiday gifts this year is expected to be just $400, down from $465 in 2019.
"Consumers will clearly be celebrating and giving gifts, but their celebrations will be subdued," said Manny Picciola, Managing Director at L.E.K. Consulting. "It's possible that they are planning to give fewer gifts in part because they are traveling and visiting less. But for many, the motivation is financial. Like so much else this year, the holiday season will suffer under the economic weight of the pandemic."
Not surprisingly, lower-income consumers are expected to be reducing their spending more than other groups. Those earning less than $50,000 per year said they'd be cutting holiday spending by 20 percent in 2020. However, across all income levels the trend held, with those earning $50,000-$149,000 saying they're reducing gift spending by 14 percent. At the higher income levels, those making $150,000 or more, a 7 percent drop in spending was reported.
Consumers said these spending decisions were greatly influenced by the pandemic crisis and resulting worries about their finances. Survey respondents reported their income was reduced by 11 percent in 2020 as a result of the pandemic, and 8 percent lost their jobs.
Another factor influencing this year's lower-than-average holiday shopping budgets is that consumers are avoiding retail stores more than usual. Fifty-two percent of consumers said they plan to do their holiday shopping in brick-and-mortar stores, down 12 percent from 2019. Forty-three percent say they'll opt to shop online, an increase in 10 percent over last year.
The pandemic has affected the holiday shopping season in other ways too, consumers taking the survey reported. Fifty-four percent said they were trying to avoid malls and crowded shopping centers, and 51 percent said they were trying to minimize their time in stores while shopping. Just 19 percent said they were planning to stick with their usual holiday shopping practices, citing concerns over COVID-19 as the reason.
"Consumers' plans for holiday shopping are consistent with their other behavior changes – overall, they are spending less and shifting their shopping online. But the result will be a very different and much more subdued holiday season," said Maria Steingoltz, Managing Director at L.E.K. Consulting. "Online retailers can expect to do well, but consumers are suffering and they are wary. Retail as a whole will feel the impact."
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