Shoppers Will Spend Less This Holiday Season

U.S. holiday shopping purchase dollars starting next month will be sharply  lower than last year, as shoppers stay cautious and are economically-uncertain, according to a PricewaterhouseCoopers report released Tuesday (Oct. 7). That report was based on a survey of more than 2,200 shoppers nationwide.

“The upcoming holiday shopping season will look very similar to 2013 as shoppers remain cautious on the economy and are concerned about disposable income, the rising cost of living, and insufficient salary, leading surveyed participants to project an average household spend of $684, down from $735 in 2013,” said Steven Barr, PwC’s U.S. retail & consumer practice leader. “The spending divide among shoppers is widening, creating two distinct groups that we are tracking – survivalists and selectionists – and retailers must cater to both segments. And with shoppers coming to expect a seamless omnichannel experience, deals to woo them into stores and having no tolerance for another season of data privacy invasion, it’s a complex retail landscape that retailers need to master – or they risk losing loyal shoppers.”

The report defined the two groups based on income levels: “Survivalists – those generally making under $50,000 per year – represent 67 percent of American shoppers (up from 65 percent in 2013 and 63 percent in 2012). They are constrained by daily cost of living and apply the lens of affordability to all purchases. The average household holiday spend for this group is $377. Selectionists – those generally making more than $50,000 per year – represent 33 percent of American shoppers (down from 35 percent in 2013 and 37 percent in 2012). They make careful decisions based on their disposable incomes. This group’s average household holiday spend in 2014 is $978.”

The report took an interestingly specific deep dive into not merely what those groups say they will spend, but when in the holiday cycle they plan to spend it. “The 2014 holiday shoppers are planning their holiday spending in four very distinct waves. Wave one includes the early holiday shoppers, where 21 percent of all holiday spend will occur from now through the Thanksgiving weekend. Survivalists plan to spend $86 in this wave, while selectionists plan to spend $202. Wave two encompasses the Black Friday period – 21 percent of spend will occur over the week of Black Friday. Survivalists plan to spend $84 in this wave, while selectionists plan to spend $205. Wave three includes the mid-season spending frenzy, where fifty percent of the holiday spend will happen between Thanksgiving and Christmas with a significant portion of that spend in the last ten days before Christmas. Survivalists plan to spend $184 during this period, compared to $489 for selectionists. Wave four is post-season deal seeking, with eight percent of holiday spend projected to be after the holidays as shoppers continue their “affordability” journey. Survivalists plan to spend $23; selectionalists plan to spend $83. Getting promotions well-timed and relevant to shopper spend profiles is critical.”