According to the 2022 Deloitte Holiday Travel Study, travel demand is falling as a worsening economic outlook and worries over travel disruption loom. Important conclusions from the report include:
- Holiday purchasing patterns will likely be impacted by inflation. However, holiday expenditure is steady year over year at $1,455 per household, although shoppers intend to buy fewer gifts for family and friends (nine gifts versus 16 in 2021).
- To maintain the holiday spirit, consumers are expected to cut back on non-gift purchases (down 12 per cent from last year) and increase their spending on experiences (up 7 per cent year-over-year).
- Those with low incomes intend to spend 25 per cent more than last year, while those with high incomes plan to spend less by 7 per cent.
- The desire for travel is decreasing; fewer than one-third (31 per cent) of American adults, down from 42 per cent in 2021, want to travel between Thanksgiving and mid-January.
- Flexible work schedules continue to be beneficial for laptop luggers. Those who want to work while on vacation travel more frequently and stay away from home for an extra eight days on average.
The 2022 holiday season will be characterized by the continuing effects of inflation and a change in consumer priorities as people look for methods to make the season joyous.
While many American adults feel the strain of rising costs, they might consider how much money they spend on things like socializing, gift-giving, and vacationing.
For 37 years, Deloitte has studied consumer behavior and sentiment ahead of the crucial holiday shopping season. This year’s 2022 Deloitte Holiday Retail Survey looks at what retailers can expect from customers shopping for the holidays. In a complementary report, the 2022 Deloitte Holiday Travel Survey, Deloitte also examined holiday travel intent in light of the present economic climate to provide a comprehensive spending picture for this holiday season.
Between September 6 and 14, 2022, Deloitte conducted online surveys with 4,986 customers for both studies. From that group, 1,540 respondents said they would go on a vacation and stay in a hotel or other paid accommodation or with family or friends. Deloitte also surveyed 40 retail executives across categories for the holiday retail study, which was conducted September 1–13. Of those, 93 per cent were from retailers with annual revenues of $1 billion or more.
For the second straight holiday season, inflation is having an impact. Thirty-seven per cent of American households report that their financial situation is worse than last year, and 41 per cent, up from 33 per cent in 2021, predict that the economy will contract next year.
After cutting back last year, lower-income groups (those earning less than $50,000 annually) anticipate spending an average of $671 this Christmas season, up 25 per cent from the previous year and on par with levels in 2019.
On the other hand, higher-income consumers (those making $100,000 or more annually) are anticipated to cut back on categories like electronics and see their expenditure fall by 7 per cent year over year to an average of $2,438. In addition, consumers intend to prioritize shared experiences and purchase fewer gifts to maintain spending levels year over year.
- Consumer spending throughout the holiday season will probably be impacted by inflation, whether people are planning to spend more or less. When asked about the reasons for the change in year-over-year spending plans, 51 per cent of those paying more attributed it to higher costs (versus in 2021), as did 66 per cent of those spending less, similar to 2021 (67 per cent).
- Spending on experiences, which includes socializing away from home and hosting parties at home, is predicted to rise 7 per cent to $575 per household.
- Although consumers want to buy fewer gifts, the amount spent per household on gifts is almost unchanged year over year at $507.
- Seventy-seven per cent of retail CEOs anticipate an increase in holiday sales over last year.
- Customers will spend less time shopping (5.8 weeks as opposed to 6.4 weeks last year), visit fewer websites and apps (9.1, as opposed to 11.1 in 2021), and visit fewer stores as a result of their plans to wrap fewer items (5.9, down from 6.6 in 2021).
- Sixty per cent of retailers surveyed say their businesses will launch Christmas promotions at least one to two weeks earlier than last year, encouraging customers to get a head start on holiday deals.
- Due to rising costs and supply chain issues, gift cards are becoming the preferred gift, resulting in an average expenditure of $252 this year, an increase of 7 per cent from 2021.
- As consumers explore ways to increase their expenditure, giving resale things as gifts is a crucial cost-saving tactic: Nearly half (48 per cent) of the retail executives questioned expect to sell refurbished or used goods this holiday season. At the same time, 32 per cent of buyers intend to purchase resale items.
Despite decreasing pandemic fears, customers are still warming up to in-store purchasing but aren’t quite ready to give up the convenience of internet shopping. This preference for digital is also driving increased interest in social media and advanced technologies for holiday purchases.
- The percentage of in-store spending is anticipated to increase to 35 per cent in 2022 (from 33 per cent in 2021), almost equal to the 36 per cent observed in 2019.
- Online continues to be a holiday shopping mainstay, holding steady with a 63 per cent share. Further, the use of smartphones for online holiday shopping is steadily rising, from 52 per cent in 2019 to 56 per cent in 2022.
- Consumers continue to value convenience for their holiday shopping, citing online (56 per cent) and mass merchants (49 per cent) as the most preferred retail formats. However, this year, grocery stores will likely see a boost in traffic (24 per cent in 2022, compared to 19 per cent in 2021).
- Consumers with an eye toward the future are experimenting with non-conventional platforms; more shoppers (35 per cent versus 25 per cent in 2021) intend to employ innovations like cashier-less stores, live/interactive video streaming, shoppable content, and “buy now” buttons on social media.
- Social networking is becoming a more valuable resource for consumers as generations who grew up with the internet develop purchasing power. More than one-third (34 per cent) of people intend to utilize social media for holiday shopping, and Gen Z (60 per cent) and Millennials are even more likely to do so (56 per cent). Additionally, up from 24 per cent in 2021, 30 per cent of holiday buyers now follow influencers for product recommendations.
Retailers are more optimistic about inventory levels than during the previous holiday season when empty shelves and shipment delays were common. Inflation may make it more difficult to build brand loyalty, as reduced costs and better availability would probably tempt customers away from their trusted brands and shops.
- The majority of consumers (77 per cent) anticipate stockouts this holiday season. Retail executives, however, are more upbeat. All respondents (100 per cent) expected to get their holiday inventory on schedule, compared to 57 per cent who said the same in 2021. In addition, more than half (60 per cent) feel at ease with the amount of holiday merchandise ordered.
- The holiday shopping season is moving ahead; in contrast to 2021, 23 per cent of holiday budgets were spent by the end of October compared to 18 per cent in 2021. Early shoppers are doing this to ensure timely delivery (42 per cent) and avoid stockouts (41 per cent).
- If their favourite brand is out of supply, more than half of consumers (60 per cent) will switch brands and verify the stock situation before shopping. Sixty-five per cent of consumers said they would switch brands if prices were too high.
- Despite the earlier start to the season, nearly half (49 per cent) of holiday consumers want to attend events during Thanksgiving week, up from 47 per cent in 2021. In addition, three in 10 holiday shoppers plan to spend on Black Friday (29 per cent versus 25 per cent in 2021) and Cyber Monday (30 per cent versus 27 per cent in 2021).
“High prices have holiday shoppers prioritizing their purchases, but there are bright lights throughout the season. Lower-income families feel more confident heading into the holidays, younger generations are embracing new retail formats, and retailers do not anticipate the issues with stockouts we saw last year. As consumers aim to be strategic about their purchases to outsmart inflation, retailers who can be flexible to meet consumers where they are will be more likely to build loyalty and profit from the holiday season and beyond,” said Nick Handrinos, vice chair of Deloitte LLP, and U.S. retail, wholesale and distribution, and consumer products leader.
As they rethink their expenditures, more Americans are deciding to remain home for the holidays. This decision is influenced by financial worries and travel challenges, such as aircraft delays and cancellations. Less than one-third (31 per cent) of people, compared to 42 per cent a year earlier, want to travel between Thanksgiving and mid-January. Reuniting and spending time with loved ones is the main reason people will travel in 2022, according to those who already have plans.
- This season, 15 per cent of Americans intend to travel over the Thanksgiving holiday, and 14 per cent between Christmas and New Year’s.
- The most major restraint on travel demand this season is financial concerns (chosen by 37 per cent of non-travelers), while one in five respondents who are staying home mention concerns about travel disruption.
- Three out of every four people who say they’ll travel will spend the same as or less than they did in 2021. The average cost of holiday travel (including hotel and travel expenses) will be $1,287 this year.
- Even though Thanksgiving will be the busiest travel period of the year, most journeys will only last a week or less (8 out of 10). While only 10 per cent of holiday trips are planned for early January, nearly half of those will be longer than a week.
- The percentage of vacation tourists who intend to fly has increased from 37 per cent to 46 per cent. Given the drop in overall travel demand, the share of total U.S. adults taking a flight (14 per cent) will be similar to 2021 (15 per cent). More than a quarter (29 per cent) plan to fly domestically, and international travel is up seven percentage points from last year.
- Out of all the travel-related product categories, demand for lodging will decline the most because 59 per cent of holiday travelers intend to stay with friends or family. Thirty-five per cent of guests will book hotel accommodations, down from 37 per cent in 2021, while 15 per cent will reserve a private rental (down from 17 per cent).
- Older Americans are staying home after becoming more eager to travel as the epidemic circumstances improved. Compared to 36 per cent in 2021, only 22 per cent of Americans aged 55 and over still intend to travel. Concerns about delays and cancellations have a more significant impact on older Americans than on younger Americans.
- More than a quarter of travelers (26 per cent) plan to work on their longest journey of the Christmas season, demonstrating the continued passion for travel of laptop luggers. Those who intend to work while on vacation make more journeys (2.4 versus 1.6 for disconnectors).
- Younger age groups, such as those between 18 and 34 (37 per cent) and 35 and 54 (27 per cent), are more likely to work while traveling. However, there is more consistency in the behaviour of laptop luggers across income levels: 30 per cent for middle-income passengers, 27 per cent for low-income travelers, and 23 per cent for high-income tourists.
“Despite facing economic headwinds and highly anticipated travel delays and cancellations, many travelers are destined to make the most of the season. While fewer will travel, those who will take to the roads and skies will likely spend more than last year. In addition, flexible work schedules continue to offer laptop luggers the opportunity to extend trips and experience more on their journeys. As the travel industry prepares for a weaker holiday season, providers who focus on the customer experience and the needs of those who do venture out will be set to shine throughout the holidays and into the new year,” said Mike Daher, vice chair, Deloitte LLP and U.S. transportation, hospitality, and services non-attest leader.
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