NPD Group predicts this year’s holiday sales drivers

Practical splurges and gifting driven by guilt will be the big sales drivers this holiday season.

That’s according to The NPD Group, which reported that consumers will look to splurge on their own needs and deal with the guilt of missing in-person celebrations this holiday season. This means the bigger ticket items that supported homebound living and drove general merchandise sales since the beginning of the pandemic are likely to continue and stimulate holiday retail sales.

Three in 10 holiday shoppers are planning to spend more than last year because they have fewer expenses related to activities like dining out and travel, according to NPD’s holiday purchase intentions study.  And 40% of consumers indicated that, as a result of COVID-19, they will buy more gifts to bring joy during challenging times.

“Splurges on both “guilt-gifting” and self-gifting will be significant components of the consumer’s retail therapy during holiday 2020,” said Marshal Cohen, said  NPD’s chief industry advisor, retail. “While the emphasis will continue to be on items that are useful to the consumer’s new way of life, the holidays are likely to prompt upgrades to up the ante on many of those practical purchases.”

Quarantine favorites related to virtual at-home lifestyles — including monitors, PC headsets, USB cameras, sleepwear, hair care, air fryers, and soda machines — that have sustained growth month after month since March are likely to remain on consumer must-have lists

In other findings, more than 40% of holiday shoppers will be shipping most of their gifts because they won’t be seeing family and friends as a result of COVID-19 precautions, which will prompt increased spending related to guilt-gifting and make way for gifts that are easier and less costly to ship. Gift cards will be a hotter commodity this year, with 53% of consumers planning to give them as holiday gifts, up from 45% last year. 

Also, while experiences are currently limited, there are some other intangible gifts that have elevated in popularity as a result of the pandemic. Food subscriptions fell in popularity during the past two years but gained traction this year, becoming number one type of planned subscription service gift, followed closely by streaming service subscriptions.

“If there is pent-up demand for anything this holiday season, it is normalcy,” added Cohen. “This season’s gift-giving will be reflective of the time in which we are living, and the needs that go along with that, but the opportunities for growth lie in the innovative options that help consumers create the holiday cheer they are craving.”