NPD: Free shipping could be deal breaker this holiday

Free shipping will be more of a sweet spot than deals for holiday shoppers this year.

Free shipping, for the first time, was identified as the number one factor influencing where consumers decide to shop this holiday, according to insights from NPD’s annual holiday purchase intentions study. The finding corresponds with consumers increasing use of online shopping due to the pandemic.  

“Consumers plan to do more of their holiday shopping online this year, and this includes shipping gifts to family and friends with whom they won’t be able to celebrate in person this year,” said Marshal Cohen, NPD’s chief industry advisor, retail. “The addition of shipping fees to all of these deliveries is a bigger financial burden on consumers than getting the best deal on the item itself.”

As far as spending goes, consumers plan to spend an average of $691 this holiday season, less than last year’s anticipated holiday spending, but on par with 2018 plans, according to NPD. The number of those who plan to spend the same amount they did last year declined by 11 points compared to last year, mostly in favor of those who plan to spend less.

Concern about the state of the U.S. economy is a contributing factor to consumers’ spending intentions. Fifty-seven percent of shoppers rate the state of the economy poorly (up from 37% last year), and 30% say they will spend less because of the state of the economy (up from 23% in 2019). 

On the flip side, consumer feelings about their personal financial situation has not changed since 2019, and 29% of consumers will spend more because they have fewer expenses related to travel, dining out, etc. as part of the current departure from experiences.

“Through much of 2020, retail spending as a whole has not seen the big declines expected, pointing to the consumer’s willingness to spend despite economic uncertainty,” said Cohen. “This year consumers appear to have more interest in ‘retail therapy’ and an aspiration to return to normalcy. We also know that, historically, consumers are pre-conditioned when it comes to holiday shopping behaviors, which means even the best promotions won’t drastically alter the core trends of the season.”