Pandemic prompts consumers to cut holiday spending
U.S. consumers report they will spend 14% less on holiday gifts this year, primarily due to COVID-19 concerns.
According to the fifth COVID-19 Consumer Insights Survey by global management consulting firm L.E.K. Consulting and data science firm Civis Analytics, respondents are cutting their holiday budgets to $400 per person, down from $465 per person during the 2019 holiday season. Forty-four percent of respondents said they had less disposable income available in 2020 than in 2019 as a result of COVID-19, and 43% said they were concerned about their finances and future income security.
Many respondents plan to cut their gift lists, with 48% saying they were giving gifts to fewer people this year. Lower-income consumers are the most concerned and are planning the deepest cuts in holiday gift spending. Respondents earning less than $50,000 a year said they'd cut their gift buying by 20% compared to 2019.
Meanwhile, respondents earning $50,000 to $149,000 a year expect to reduce spending on gifts by 14%, and those earning $150,000 or more a year will cut their spending by 7%. Consumers are making these cuts as they report their income was reduced by 11% in 2020 specifically as a result of the pandemic, and 8% had lost jobs.
The pandemic is also changing the way consumers shop for gifts, the survey shows. Respondents expect to do 52% of their holiday gift shopping in stores, compared to 64% in 2019. Forty-three percent of respondents will opt for online retailers with home delivery, up from 33% in 2019.
Of 1,575 respondents who answered a question about how COVID-19 would change their shopping behaviors:
• 54% said they were seeking to avoid malls and shopping centers with high traffic.
• 51% said they were seeking to minimize their time in stores.
• Only 19% said they were planning to stick with their typical holiday shopping practices despite knowing that COVID-19 remains a risk.
• 20% said they planned to shift their shopping to small mom-and-pop stores instead of national chains, and 14% said they were planning to shop more at outdoor complexes as a result of the pandemic.
L.E.K. Consulting and Civis Analytics surveyed approximately 2,400 U.S. consumers in November 2020.