‘Tis the Season to Be…Thrifty?

Are you making a list and checking it twice – the cost, that is? If so, you aren’t alone this holiday shopping season. Our colleagues at Goldman Sachs conducted two surveys recently to see if the current economic climate – especially high inflation – is changing how people shop for gifts.

Here’s what they found:

Many shoppers started cutting costs early to save up 

About three-quarters of us trimmed our spending this year to save money for the holiday shopping season, according to one survey conducted by Goldman Sachs. Nearly half spent less on eating out. Some made cuts in entertainment (36%), shopping (35%) and travel (32%).

But even with all this thriftiness, almost a third of people plan to dip into their savings to pay for their holiday purchases this year.

High inflation is weighing on minds and wallets 

Our colleagues in Global Investment Research did a survey of US consumers and found that 46% of participants plan to be more frugal this holiday season than last. Only 31% plan to increase their spending. Why? 

Inflation is the likely culprit. Nearly 80% of shoppers say holiday gift prices are higher this year and the same percentage say they plan to spend differently because of inflation.

We’re looking to get the most from our dollars 

Basically, many of us are downsizing our holiday spending, according to the experts in Global Investment Research, but how we do that depends on our gifting goals.

Some of us plan to buy fewer presents (55%), and some are looking for less expensive presents (46%). Nearly a quarter of us are doing both.

Here are some of the other spending insights uncovered by our Research colleagues:

• Discounters and off-price retailers will feel the love. Shoppers are willing to trade down from expensive gifts and are looking for bargains. However, higher-end retailers could still see plenty of traffic, because higher-income consumers report being less affected by inflation than lower-income groups.
• We’re shifting back to brick-and-mortar. Online shopping isn’t going away but only 40% of people say they’re spending more online this year – the lowest amount since before the pandemic.
• We still love our gift cards, toys and games. These remain the most popular gift categories. But gifts of experiences have returned to pre-pandemic popularity. What’s lost some of our attention? Media, jewelry and housewares.