AlixPartners forecasts modest increases holiday spending; Customers cite inflation, election uncertainty as factors in budget planning – increasing number of shoppers to buy most gifts on sale

• AlixPartners projects 2-5% sales growth for holiday season, lower than 2023
• A survey by the firm shows 26% of consumers intend to spend less than last year – 43% for lower-income households intend lower spending
• 42% of shoppers plan to buy most of gifts on sale, an increase over 2023
• Shoppers plan to postpone buying until after election; trend of increasingly fewer people shopping before Halloween accelerates
• Biggest cutback is on self-gift giving; lower-cost brand consideration to rise
• Only 1/3 of buyers will visit retailer’s website if item out of stock in store

NEW YORK (September 17, 2024) – Persistent inflation and election-year uncertainty will lead to lower spending across the board this holiday season. Shoppers are more likely to start shopping after Halloween, hunt for deals and consider value brands, and cut back on gifts for themselves, according to a forecast and Holiday Outlook Survey released by AlixPartners, the global consulting firm. 

The firm is projecting just a 2% to 5% increase in sales over last year, lower than last year’s 6% growth. 

The annual AlixPartners Holiday Outlook Survey polled more than 1,000 American consumers. It found that 26% of consumers plan on spending less this holiday season than last year, and that spending reductions are significantly more prominent with lower-income households.

Some 43% of households with annual incomes under $45,000 said they plan to spend less than last year, according to survey responses. Roughly one-third of $45,000-$100,000 households will pullback vs. 2023; that number declines to 22% for $100,000-plus households.

Holiday decorations (-11%), show/experiences (-11%) and travel (-10%) are among the categories suffering the biggest declines in spending intention.

“Consumers are clearly under pressure, and many have no plans to open wallets much wider this holiday season,” said Bryan Eshelman, a partner & managing director in the retail practice at AlixPartners. “After decades of conditioning from Black Friday and Cyber Monday blowouts, shoppers expect retailers to go heavy on promotions and be generous with the discounts. We can safely say ‘Tis the season for deals, deals and more deals.’”

Some 42% of respondents intend to purchase most gifts on sale, an uptick from the 38% who were looking to that strategy in 2023. Spending declines are planned for nearly all product and services categories except for food and beverage at home.

For retailers, inventory planning is also increasingly important this time of year. Even though 65% of shoppers plan to start holiday buying after Halloween – a significant decline from the 2019-2022 period – they expect shelves to be stocked when they finally decide to show up. If a consumer finds desired items are unavailable in-store, only one-third say they will order from the retailer’s website; most buyers will shop at another retailer’s store or website.

Two-thirds of customers intend to make at least 30% of holiday purchases online.

“The days of customers putting up with inventory headaches are in the rearview mirror,” said Ryan Poole, a partner in the retail practice at AlixPartners. “Buyers clearly are in less of a hurry to get their holiday shopping started. When shopping does get under way, retailers with insufficient inventory are at a high risk of losing those buyers to competitors.”

About AlixPartners

AlixPartners is a results-driven global consulting firm that specializes in helping businesses successfully address their most complex and critical challenges. Our clients include companies, corporate boards, law firms, investment banks, private equity firms, and others. Founded in 1981, AlixPartners is headquartered in New York, and has offices in more than 20 cities around the world. For more information, visit www.alixpartners.com.

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John Stoll

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