- U.S. holiday spending is expected to rise, but growth remains uneven, with higher-income households driving the surge, while others stay cautious.
- Retailers are reshaping the holiday shopping calendar, extending sales and leveraging social media platforms like TikTok to capture consumer attention.
- Technology, social commerce, and evolving consumer behaviors are driving new trends, starting with the 2024 holiday season.
Here we go again—the holiday music is inescapable, twinkling lights are everywhere, and consumers are dusting off their credit cards for the annual spending spree. But this year isn’t your average sleigh ride. The 2024 holiday season promises to be a turning point for retailers navigating the tricky terrain of cautious consumers, widening economic gaps, and the digital revolution that’s upending the way we shop.
Sure, spending is on the rise—sort of. But the devil’s in the details.
Holiday budgets and spending trends
According to PwC’s Holiday Outlook 2024, the average holiday shopper plans to spend approximately $1,638 on gifts, travel, and entertainment, marking a 7% increase from 2023. This uptick is influenced by factors such as inflation and a renewed emphasis on experiences and travel post-pandemic. Notably, 26% of shoppers intend to increase their holiday budgets, with some planning to spend up to $3,076 this season.
However, this spending surge is not reflected across all demographics. Higher-income households are driving the increase, while lower-income consumers remain cautious due to financial constraints. The National Retail Federation (NRF) predicts sales will increase by 2.5% to 3.5% over 2023, reaching up to $989 billion. And if it sounds impressive, you might want to rethink it: That’s the slowest growth rate since 2018, a clear sign that many consumers are still grappling with financial pressures. Inflation is still present and lower-income households are shopping with caution.
Black Friday every Friday
The holiday season has expanded beyond traditional timelines. Remember when Black Friday was the shopping day? Not anymore. Retailers are treating every day like a mini Black Friday, stretching deals across weeks and hoping to lure consumers with discounts. Major retailers like Walmart, Amazon, and Target are playing the long game, kicking off sales weeks before Thanksgiving.
And then there’s Cyber Monday, which this year set a record with sales between $12.8 billion and $13.3 billion, slightly surpassing previous records. Significant discounts in electronics and apparel drove consumer spending, while mobile devices accounted for over half of sales.
The true disruptor? Social commerce. TikTok Shop had a blockbuster season, with U.S. sales hitting $100 million on Black Friday, triple from last year’s figures. That’s right, TikTok isn’t just for dance videos anymore, it’s the new mall, and it’s open 24/7!
Regional realities in spending
Not all holiday budgets are created equal. In fact, spending varies significantly across regions. A Wallet Hub study examining over 550 U.S. cities, revealed that Newton, Massachusetts, tops the list with an average holiday budget of $4,200, fueled by high incomes. In contrast, New York City’s holiday spending cap averages $1,539, while Lauderhill, Florida, placed last, with shoppers working with just $217.
What does this mean? The holidays might feel extravagant in some zip codes and more modest in others.
Retailers on alert
With consumers more discerning than ever, retailers are trying out different strategies to capture their interest. Many are offering ongoing promotions and extending sales periods to maintain revenue during this critical shopping period. Additionally, numerous retailers are focusing on value and convenience, with off-price retailers and membership clubs, like Costco expected to perform well.
TikTok’s success is further proof that the future of retail is both digital and personal. And retailers are leaning more and more into technology, enhancing e-commerce platforms and doubling down on social media to engage consumers.
The bottom line
The 2024 holiday season isn’t just about sales—it’s a crystal ball for the future of retail. And it is set to redefine the U.S. retail landscape.
While overall spending is projected to increase, the growth is uneven across different income groups and regions. Evolving shopping behaviors, innovations in technology, financial strategies, and social media engagement are shaping consumer spending patterns. If retailers can adapt to these changes and crack the proverbial code, they’re bound to thrive long after the decorations come down.
As the season unfolds, it is crucial to monitor how these factors influence retail performance. And watch how they set the stage for future trends in the industry.
