Holiday spending is expected to decrease this year amid limited travel and incomes during the coronavirus pandemic, according to a survey released Wednesday from the accounting and consulting firm Deloitte.
The average household projected to spend $1,387, a 7% decrease year-over-year, according to the survey, which recorded answers from a little over 4,000 people in the U.S.
“Retail has changed so dramatically," said Peter Sachse, a longtime executive who was the former chief growth officer for Macy’s.
“The competitive landscape has exploded," he said, adding that once-popular chain stores Kmart and Sears were no longer the retail powerhouses they once were.
Retail experts said they estimated that travel sales would come down significantly this holiday season as millions of people worried about the possibility of contracting or transmitting the coronavirus.
On average, the survey found, households could spend $260 on travel, a decrease of 34% year-over-year.
As a result, according to a podcast released earlier this month from Deloitte, gift spending could increase to make up for not being able to see friends or relatives. It would mark somewhat of a change compared to other years, which showed growing emphasis on experiences and services instead of material goods.
In keeping with consistent trends, online shopping will continue to boom — analysts said certain surveys had shown e-commerce had grown between 40% and 45% this year — and the popularity of in-person shopping could decrease.
The practice of buying online and picking up in-person is likely to remain popular, as will contactless pickup, analysts said. Adept retailers will offer contactless returns, as well.
Personal electronics, which rank among the top five most popular industries each holiday season, have a good chance of remaining a popular purchase this year, the analysts with. More people have stayed home during the pandemic and entertained themselves with computers, phones, gaming consoles, and TVs, and the holidays could present an opportunity to upgrade what they have. Increases in subscription services, such as HBO, Hulu, and Netflix, could also grow.
Home decor sales or upgrades, which could be as small as buying new, festive hand towels, are also expected to draw consumers who are staying put for the holidays, the analysts said.
On average, a household could spend $487 in gift card sales, around $435 in “non-gift purchases,” such as decor or home upgrades, and $205 on home festivities.
Another source — perhaps unexpected — of potential spending: Pet goods.
As pet ownership has risen prolifically during the pandemic, with particular emphasis on dogs, in which demand has far exceeded supply, new owners could flock to buy treats, toys, costumes, and accessories.
Overall, the analysts said, retailers who will see major gains in profit will be those that are “off-price, off the mall, and online.” They pointed to chains such as Lowe’s, Home Depot, Target, and Walmart, which are generally not in malls and have well-developed online shopping platforms that offer many goods at generally affordable prices.
"Off-price” discount retailers like Burlington Coat Factory, Ross, Marshalls, and TJ Maxx will likely also do well, they said. Despite each chain’s stores carrying different inventory based on what discounted goods are available to them, Marshalls and TJ Maxx have online shopping.