With Thanksgiving and Black Friday behind us, we’re in the thick of the holiday shopping season. It’s an important time for retailers, who deluge us for a couple months with nostalgia, suggestions to splurge and maybe a dash of guilt, then tally up their earnings at the end to see if they’ve made the shareholders happy. 

It’s also the time of year when retail organizations survey consumers and try to figure out if they’re going to pony up the money to keep the economy humming.  

With inflation and recession worries, nobody seemed quite sure what to expect this year when the forecasts came out. The National Retail Federation (NRF) sounded a note of optimism, calling for a 3 to 4% increase in holiday spending in 2023. Adobe predicted a similar bump. 

Yet there were warning notes, too. Accenture’s annual survey forecasts shoppers are going to give fewer gifts as they face high interest rates, inflation and uncertain incomes. 

“It is slightly above pre-pandemic levels. It’s not (a) tremendous amount of growth,” said Anu Sivaraman, assistant professor of marketing at the University of Delaware’s Alfred Lerner College of Business and Economics. 

Deloitte’s research hones in on the average for each consumer, with respondents predicting they will spend 14% more than they did last year. But that’s partly because these shoppers are assuming costs will be higher because of inflation, and partly that last year spending was still low after several years of pandemic stagnation. 

As always, it comes down to how you slice the statistics. For example, the NRF did not emphasize the fact that if you account for inflation, the spending forecast is actually down slightly this year.  

“We’re anticipating a pretty dour holiday season, or at least it could be,” Wall Street Journal retail reporter Sarah Nassauer said on one of the news site’s podcasts. “Certainly all the predictions in terms of sales are for it to be OK but not gangbusters.” 

Here are some trends that Sivaraman highlighted about the end-of-year shopping frenzy and how it’s playing out. 

Sales may be losing some of their impact

Forecasts that shoppers will keep a sharp eye out for sales this year as they try to save money appeared to pan out over the Black Friday and Cyber Monday time period. 

“Customers … are very deal prone now so they are ultimately going to want a deal because of how expensive everything is and how everything is inflated,” Sivaraman said. 

According to the NRF a record 200.4 million shoppers took part in Black Friday and Cyber Monday shopping, in person and online, higher than it had initially predicted. More people shopped online than in-store. About the same number visited stores as last year, and the number of online shoppers increased. 

That said, big sales like Black Friday have lost some of their urgency, with the frenzied crowds of yesteryear giving way to calmer shoppers watching for online discounts that stretch out for longer. And there’s a risk those extended sales can backfire. 

With increasing promotional sales in the aftermath of the Great Recession in 2007 and 2008 to encourage reluctant consumers, people have become desensitized to offers and sales, Sivaraman said. 

“Retailers have kind of conditioned people into believing that there’ll be another deal soon,” Sivaraman said. 

Also, drawn out sales may actually make people less likely to make a purchase in some circumstances. Sivaraman has done research on a related phenomenon called inaction inertia. This means that if customers bypass an attractive opportunity, they are less likely to later act on a deal that is slightly less attractive, she said. Consumers may see a sale price and reduce the value of an item in their minds. If they miss a 50% discount (say, on Black Friday) and later see a 40% discount, they are less likely to act on it, even though it’s still technically a steep discount. 

“If you keep offering sales, at some point, your customers are going to stop acting on those sales, because they’re always there,” Sivaraman said. 

Keep an eye on the young people

As student loan payments begin to kick in again, some of the country’s largest and most important consumer segments could be impacted, Sivaraman said — millennials and Gen Z, many of whom are still paying off college debt. 

Deloitte’s survey found that 17% of people have student loan payments beginning in the fall, and almost half of those may cut back on holiday spending. 

That so few former students are planning to curtail their holiday spending surprised Sivaraman. 

“I thought that, personally, would be way higher,” she said, as loan payments eat into the disposable income of young adults joining the workforce. 

In a sense, it’s good news for the economy that only half of these loan-paying consumers are cutting back. But that still impacts retailers, Sivaraman said. 

A changing gift culture

In addition to financial pressures, younger people may also have a different outlook on possessions and shopping. 

This generation is putting pressure on the system by shopping for used items, Sivaraman said. 

“Thrifting has become a whole different lifestyle,” she said. “People in their teens, like my daughter, buy most of their clothes used.”  

The yen for second-hand or sustainable living includes changes to gift-giving and a focus on reducing food waste. Younger people are leaning instead toward experiences like travel, events and food, she said. 

Hints of this can be seen in Deloitte’s survey, which in its predictions of spending growth includes experiences like restaurants and entertainment. It also says consumers are planning to buy fewer gifts and spend more on gift cards. 

Gift cards “give them the flexibility to do whatever they want to do, and they may not do it with a traditional retailer,” Sivaraman noted. 

An expanding season

This year, shoppers were treated to holiday ads and in-store Christmas displays before Halloween. 

“Fifteen years ago, ’til the week before Thanksgiving, we didn’t see Christmas stuff in the stores,” Sivaraman said. “Next, there will really be Christmas in July.” 

Some online retailers already do this, and it may not be too far off for brick and mortar stores. 

Although a few may gripe at the TV when these early ads come on, Sivaraman doesn’t think retailers are getting much blowback over these earlier efforts. Consumers, she said, just aren’t  paying much attention that early. 

She thinks companies may be trying to spread the revenue out a little bit. 

“They don’t want (revenue) to all come in one month, and just have one glorious month and 11 miserable months that they have to report to their stockholders,” she said. 

This, too, may be influenced by a generational shift. As younger people move away from consumerism, Sivaraman wouldn’t be surprised to see stores keep items stocked longer, without such a constant, seasonal change of inventory. They might even have Christmas items available all year. This approach is “smaller, more specialized, more sustainable.” 

That might mean these holiday shopping forecasts and year-end consumer spending blitzes will become ever less relevant. 

Overall, the dilution of the holiday shopping season may help people. 

“When money is tight, people plan their purchases. And when you have time, you can plan better and you can buy better, and you can buy more,” Sivaraman said.