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Will holiday spending be marvelous or ho-hum?

How will holiday shopping sales turn out? Here's what people are saying.
Sandra Levy
Senior Editor
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High gasoline and food prices have robbed consumers’ purses this year, interest rates have spiked, and the housing market is losing momentum. Will holiday spending be marvelous or ho-hum?

Here's what people are forecasting:

Holiday spending is expected to be healthy according to the National Retail Federation, which expects holiday retail sales during November and December to grow between 6% and 8% over 2021 to between $942.6 billion and $960.4 billion.

Last year’s holiday sales grew 13.5% over 2020 and totaled $889.3 billion, shattering previous records. Holiday retail sales have averaged an increase of 4.9% over the past 10 years, with pandemic spending in recent years accounting for considerable gains.

“While consumers are feeling the pressure of inflation and higher prices, and while there is continued stratification with consumer spending and behavior among households at different income levels, consumers remain resilient and continue to engage in commerce,” NRF president and CEO Matthew Shay said. “In the face of these challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season.”

NRF expects that online and other non-store sales, which are included in the total, to increase between 10% and 12% to between $262.8 billion and $267.6 billion. This figure is up from $238.9 billion last year, which saw extraordinary growth in digital channels as consumers turned to online shopping to meet their holiday needs during the pandemic. While ecommerce will remain important, households  also are expected to shift back to traditional holiday shopping experience.

“This holiday season cycle is anything but typical,” said NRF chief economist Jack Kleinhenz. “NRF’s holiday forecast takes a number of factors into consideration, but the overall outlook is generally positive as consumer fundamentals continue to support economic activity. Despite record levels of inflation, rising interest rates and low levels of confidence, consumers have been steadfast in their spending and remain in the driver’s seat.”

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“The holiday shopping season kicked off earlier this year – a growing trend in recent years – as shoppers are concerned about inflation and availability of products,” Kleinhenz said. “Retailers are responding to that demand, as we saw several major scheduled buying events in October. While this may result in some sales being pulled forward, we expect to see continued deals and promotions throughout the remaining months.”

Kleinhenz’ comments mirror NRF’s consumer data, which shows that consumers have been kicking off their holiday shopping early over the last decade in order to spread out their budgets and avoid the stress of holiday shopping. This year, given concerns around inflation, 46% of holiday shoppers said they planned to browse or buy before November, according to NRF’s annual survey conducted by Prosper Insights & Analytics. Still, consumers plan to spend $832.84 on average on gifts and holiday items, such as decorations and food, in line with the average for the last 10 years.

NRF also weighed in on hiring during the holidays. NRF expects retailers will hire between 450,000 and 600,000 seasonal workers. That compares with 669,800 seasonal hires in 2021. Some of this hiring may have been pulled into October as many retailers are eager to supplement their workforces to meet increased consumer demand. 

While retailers face a multitude of challenges, one is totally out of their hands. Weather, as always, plays a role in holiday retail sales. The National Oceanic and Atmospheric Administration is forecasting warmer-than-average temperatures for the Southwest, Gulf Coast and Eastern Seaboard, which cover a large swath of the U.S. population, but wetter and snowier conditions are expected for parts of the northern tier. 

NRF’s holiday forecast is in line with the organization’s full year forecast for retail sales, which predicted retail sales will grow between 6% and 8% to more than $4.86 trillion in 2022.  

NRF's holiday forecast is based on economic modeling that considers a variety of indicators including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales and weather. NRF’s calculation excludes automobile dealers, gasoline stations and restaurants to focus on core retail. NRF defines the holiday season as Nov.1 through Dec. 31.

[Read more: Consumers are spending more, buying less]

cvs walgreens holiday spending

A survey among 1,049 adults aged 18 years old and older, by Toluna found nearly a third of Americans will spend less money this holiday season, with many seeking items that are on sale.

The key findings of Toluna's survey include:

  • 45% of respondents plan to buy more discounted/sale items;
  • 41% plan to buy fewer items overall;
  • 37% of respondents are planning to use more coupons this holiday shopping season;
  • 31% of those surveyed said that they plan to buy less expensive brands;
  • 28% of people are planning to spend less this holiday season due to the soaring cost of living; and
  • 20% of respondents plan to buy their gifts from a different retailer to save money.

Shopping preferences this holiday season:

  • 37% of those surveyed plan to do a 50/50 mix of online and in-store shopping;
  • 33% plan to do three-quarters of their holiday shopping online, with the remaining quarter completed in store;
  • A majority of respondents (71%) are willing to consider other brands if their preferred choice is too expensive or unavailable; and
  • Only 5% said they are unlikely to consider switching brands if their preferred choice is unavailable or too expensive.

Kiplinger said on its website that it is forecasting a “meh” season for retailers, with profits peeling off of inflation-fueled price increases rather than sales volume. The forecast is retailers will see only a 1% increase in sales, after inflation.

"For inflation-weary shoppers, however, big discounts could be in the offing as retailers seek to dispose of warehouse-clogging inventory," Kiplinger said. "Last-minute shoppers should rule; Christmas Eve is on a Saturday this year, and malls are seeing a post-Covid comeback in foot traffic."

Deloitte’s 2022 holiday retail survey finds that the 2022 holiday season will likely be defined by the continued impact of inflation on the U.S. economy and a shift in consumer priorities as consumers find ways to keep the holidays festive.

Key Deloitte survey findings:

  • Finances are taking a hit—37% of American households say their financial situation is worse than last year, and nearly three-quarters (73%) expect product prices to be higher this year;
  • But there are bright spots this season despite economic pressures. Holiday spirit (and spending) is alive and well; 
  • Overall spending in 2022 is expected to match 2021 levels, at $1,455 per consumer;
  • Another encouraging story comes from the low-income group, where stability brought on by wage growth has shoppers feeling more hopeful and returning to prepandemic spending levels. Still, consumers are feeling the pinch of higher prices. They may be spending the same amount overall, but they are not spending the same way. Looking for ways to outsmart inflation, non-gift purchases are being reined in to keep the traditions of gift-giving and socializing alive;

[Read more: Strategic moves to drive results this holiday season]

  • Consumers also plan to purchase fewer gifts while shifting more of their budget to gift cards. As a result, shopping will get wrapped up in a much shorter window;
  • Not only are consumers completing their shopping quickly, but they also are getting started earlier. After two years of managing holiday problems such as stockouts and extended delivery times, shoppers are not taking any chances. In fact, 38% plan to start shopping earlier than last year, while one quarter of the holiday budget will likely be spent by the end of October; 
  • As in previous years, online shopping is on track to dominate the season, but brick-and-mortar stores have a silver lining. Shoppers are warming up to in-person shopping, with 35% of the budget being spent in-store, up from a low of 28% in 2020. While consumers grapple with rising costs this season, it is important to remember that many view the holidays as a time to celebrate with loved ones; and
  • In Deloitte's travel survey, over half are ready to spend on travel and social events, motivated by reconnecting with friends and family. The bottom line is that despite the obstacles, consumers will likely find ways to make the holidays special. And savvy retailers likely will be the ones who find ways to engage with evolving spending priorities to shine this holiday season.

How are retailers faring thus far?

Visits to some of the nation’s largest retailers are trending up as the holiday season approaches, according to a report from foot traffic analytics firm, titled Target & Walmart Ahead of the Holidays. The report show that visits are on an upward trajectory at Target and Walmart and that trend may continue as we get closer to the holidays.  

Key takeaways from the report:

  • Target is outperforming in a big way. Year-over-year, visits to Target stores were down 2.1% during October. But compared to 2019, visits were up 14.5%; and
  • Walmart visits during October were down 3.5% compared to 2021 but were up 1.8% compared to 2019 — not quite at Target’s level, but an improvement over pre-pandemic numbers.

How will the pharmacy retail sector fare?'s vice president of marketing, Ethan Chernofsky told Drug Store News that followingoffline traffic peaks in 2021, leaders within the pharmacy sector have continued to perform well and there is the potential for continued strength in the coming holiday season.

"Brick-and-mortar pharmacy benefits from a built-in demand that emphasizes proximity and convenience for quick visits. Yet, the wider array of products available position these retailers well for ‘upsell’ opportunities in a period that will be heavily defined by consumers looking for value and the ability to accomplish more in a single visit. This is in addition to the continued emphasis on health and wellness and beauty products that tend to make up a significant part of the retail puzzle for these chains," Chernofsky said. 

Lastly, PwC's Holiday Outlook 2022 finds that 74% of respondents plan to spend the same or more this holiday season as they did last year. Aware that they might have to stretch their holiday budgets, some have already started to cut back in the months leading up to the holiday season — on dining out, apparel and streaming services.

PwC asked 4,000 consumers where and when they will shop and travel — as well as what drives their purchasing decisions.

PwC's 2022 holiday spending key themes:

  • This holiday season, 35% of shoppers plan to spend more than they did last year. High-earning young shoppers, these big spenders skew male and live in metropolitan areas. In addition to spending on their families, they also will spend more on themselves than the average holiday shopper;
  • Overall, consumers plan to spend an average of $1,430 on gifts, travel and entertainment this year — very similar to the $1,447 they spent last year. That’s up 20% over pandemic-ravaged 2020 and more than 10% over 2019; and
  • Consumers will spend $1,430 on average: $754 on gifts; $452 on travel; and $224 on entertainment.

"Levels of confidence in holiday spending vary by geography, as well as by age and income level, requiring brands and retailers to match their messaging with their customers’ specific preferences." PwC said.

  • Higher income households — whose purchasing power has increased in recent months as their personal incomes have grown — will spend considerably more this holiday than they did last year. Unlike middle- and lower-income households, their spending patterns over the last several months have remained unchanged, despite inflation. In fact, while holiday budgets for consumers at large remain essentially the same as last year, those with household incomes of $120,000 and above will increase holiday spending by 15%. They will spend $2,759 on gifts, entertainment and travel — close to double the $1,430 average; and
  • Millennials are the only age group spending more this holiday season than they did last year: 11% more.

"High-income households are most likely to have used virtual reality to buy physical products and luxury goods. And 50% of consumers told us they are excited about what the metaverse has to offer. If you’re not among the two-thirds of business leaders actively engaged in planning or implementing metaverse-related activities, the time to start is now," PwC said. 

  • As in previous years, millennials (ages 26-40) are primed to spend, with an average budget of $1,823 — 27% higher than consumers overall. In fact, almost half (48%) expect to spend more this holiday season than they did in 2021, compared to 35% for all age groups;
  • They are also more likely to travel this holiday (63% v 47% for all consumers). Often residing in large metropolitan areas, they are less likely to have to deal with the price of gas, given much shorter commutes, often via public transportation. And in the wake of the pandemic job reshuffling, many have traded up for higher paying roles in a job-seeker’s market;
  • Six in 10 millennials belong to a customer loyalty program and 66% have a brand or retailer credit card, which influences online browsing (77%) and in-store shopping (79%) — higher than any other age group; 
  • 53% of millennials will include resale or upcycled items on their holiday shopping lists (v 37% of all age groups); and
  • While online shopping has continued to gain ground over the years, in-store shopping is holding its own, as consumers seek that in-person holiday sparkle. This year, consumers said they will do 57% of their shopping online; 43% in stores.