People are prioritizing travel over material goods when deciding where to put their holiday funds, according to a new Grid/Harris poll — likely in large part, experts say, because of relaxed covid restrictions.
“We’re seeing a lot of consumers that are really wanting to celebrate the activities and really be around family and friends for the holiday,” said Shelley E. Kohan, an associate professor at the Fashion Institute of Technology’s Jay and Patty Baker School of Business and Technology.
A third of survey respondents said they planned on spending more on travel this year compared to last year — and only 10 percent said they were going to spend less.
The automotive group AAA also said that holiday travel this year will be up 1.5 percent compared to last year, putting it at 98 percent of pre-pandemic volumes. That means travel volume will be the third highest, after 2005 and 2019, since the association began tracking Thanksgiving travel in 2000.
“This is really the first holiday where everything seems almost back to normal,” said Kohan.
But, while travel is clearly a priority for many Americans, that’s not to say consumers are flip about the high travel prices this year. Taking a flight, for instance, comes with a higher price tag than usual — in part because the number of flights still hasn’t caught up with consumer demand. If driving is part of your holiday plan, the good news is that gas prices are coming down — but more slowly than many would like.
Just over half of US adults say these travel-related booking prices, from airfare to hotel rates, are impacting their holiday season plans.
So, where are consumers cutting back?
Consumers who are spending more on travel may be spending less on the material goods — like apparel, toys or seasonal decor — that they might normally buy friends and family members for the holidays. Instead, they might choose to go on a trip with a family member, said Kohan.
The poll found that 78 percent of US adults say that the price of consumer products will impact their usual winter holiday plans.
“They’re not pulling back 100 percent, but they are being a bit more surgical about how they’re spending money,” she added.
This trend plays out in the survey data. When it comes to material goods, consumers are more likely to say they plan on cutting back, as opposed to spending more this season. Just 12 percent of survey respondents said they planned on spending more on decking the halls this year compared to last year, and 28 percent said they planned on spending less.
Consumers are hoping to score deals
For the material items they are buying, it’s all about “value pricing” — when a consumer decides if a product is worth the money.
Many retailers are tapping into this sentiment in a couple of ways:
First, they’re pushing Black Friday sales up earlier in the year to encourage consumers to spend their money at the start of the season, said Kohan. Last year, sales kicked off in mid-October. This year: early October.
Second, during the October sales, some major retailers, like Target, offered consumers price matching. This basically means that if a consumer buys a product in October that goes on sale in December, the store will adjust the price of the purchased product. Consumers are more likely to buy a product earlier if they know they won’t get a better price later on, Kohan said.
These strategies are working — October’s retail sales were up 7.5 percent compared to last year, outpacing the Consumer Price Index. And while 54 percent of Americans (a figure that’s roughly the same as last year’s) agree that the winter sales are the best time to shop, about 27 percent of survey respondents also said they plan to spend more on holiday sales this year compared to last year.
What does this mean for the rest of the holiday shopping season?
“If the cadence of sales is not to the point where retailers are moving stock fast enough, we’re going to see this heavy discounting heading into December,” said Kohan. “And that becomes more prominent the closer we get to the holidays.”
Back to brick-and-mortar shopping
Another interesting trend tied to that “back to normal” desire for human connectedness is how many people are shopping with the money they have set aside for material goods: They’re heading back into stores. Kohan said that likely has to do with people wanting to get in the spirit of holiday shopping — pre-pandemic style.
“A lot of shoppers are really interested in the socialization aspect of going out to the stores this year,” said Kohan. As a result, we can expect more hybrid shopping, with sales split between online and brick-and-mortar stores, than we saw last year.
Thanks to Lillian Barkley for copy editing this article.