October 2021
Happy Hybrid Holidays!
Consumers tell NPD their holiday spirits are high … but the pandemic lifestyle still packs a punch
“It’s going to be a hybrid holiday this year, blending the return of a celebratory feeling with the now normalized pandemic lifestyle,” according to Marshal Cohen, chief retail industry advisor for NPD. “We expect the consumer’s sustained propensity to spend will carry through the traditional November and December shopping period. Shopping in the here-and-now, and other spending styles that have emerged during the pandemic, will bring additional growth to the expanded October-into-January shopping season this year.”
An NPD survey of U.S. consumers that tracks holiday purchase intentions each year reveals nearly two-thirds of shoppers expect their 2021 holiday season will be more like it was last year than during the pre-pandemic holiday season in 2019. However, alongside the accelerated growth in online shopping, and other enduring pandemic-based lifestyle and shopping shifts, the survey results tell the story of rising consumer optimism about the holidays this year.
Nearly nine out of 10 U.S. consumers (86%) expect to spend the same or more on holiday gifts than they did last year. In fact, consumers plan to spend an average of $785 on holiday shopping this year — higher than 2019 and a significant increase above 2020 spending.
While all categories will benefit from the positive swing in spending, the categories that have done well during the pandemic — including consumer electronics and home products — are expected to reap the greatest rewards during this holiday season. Nearly one-third of U.S. consumers have already made holiday purchases earlier than planned this year.
Consumers are feeling more optimistic about their holiday spending than they were just a year ago.
Holiday Spending Intentions
% Among Total Respondents
A Retail Minute with Marshal – A New Kind of Holiday
Chief Retail Industry Advisor, Marshal Cohen, imagines two different storylines for the holidays — while many consumers are looking to shop early, the calendar this year provides even more opportunity to start shopping later.
It’s Beginning to Look a Lot Like
2019 …
Early holiday shopping is back to the pre-pandemic level, with consumers feeling more comfortable in stores. Nearly six out of 10 (58%) of consumers feel more comfortable shopping in stores now that COVID-19 vaccinations are widely available, even as the threat from new variants continues.
A celebratory feeling returns …
- Holiday purchases pulled to earlier in the year don’t seem to dampen consumers’ plans for holiday spending.
- Nearly one-third of consumers (29%) plan to spend more than they did last year, up from 22% in last year’s survey.
- Consumers plan to see more family and friends this year, whether hosting or visiting, and more than a third plan to buy more gifts because they will be celebrating with friends and family.
- Experiences are back on the gift list, with nearly six out of 10 consumers (57%) planning to purchase an experiences and intangible gifts, up from 50% last year.
- All categories can expect some increased spending, including products like apparel, footwear, accessories, and beauty that support peoples’ interest in getting out and about and leverage their increased ability to do so,
Plan to START Shopping
% Among Total Respondents Providing a Response
… Except When it Seems More Like 2020
Similar to last year, and following the trendline toward omnichannel shopping, 41% of U.S. consumers say they will shop earlier due to COVID-19. Early shoppers spend more and are more likely to spend online, so it’s important to understand that while there is more in-store shopping happening than in the darkest days of the pandemic, e-commerce continues to grow.
The pandemic lifestyle continues …
- Free shipping beat value and price as the top influencer of where consumers will shop this holiday season
- Nine out of 10 (85%) of consumers will include shopping online in their holiday plans, which is up from 80% last year.
- More shopping continues to move online, with nearly nine out of 10 consumers planning to shop online this holiday season and store-only shoppers are shifting to shopping both in stores and online.
- Financial perceptions about their own personal financial situation and the state of the economy are unchanged from last year
- Popular sales categories through the pandemic, like consumer technology, home, and toys, can expect sustained focus, as the pandemic drags on and many consumers continue to concentrate on enhancing their time at home.
Store-only shoppers are now integrating online into their experience
The Demographics of Holiday Spending Intentions
Similar to last year, those who say they will spend more, compared to the previous year, tend to be male, young (i.e., Gen Z, Millennial), have kids, and earn higher incomes.
But this year there is more pronounced positive spending intent among Millennials.
Consumers earning less than $45,000 per year are playing it safe, with spending intentions similar to 2020 levels.
Expert Views on Holiday 2021
Knowing what’s in store for the holidays can help retailers better navigate the pace of change and direction for particular brands and products. Here’s what four of our industry experts see as the big stories to watch in their categories during the holiday season this year.
Maria Rugolo
Director, Industry Analyst
Connecting to the theme of home will be apparel’s best approach in a very different selling season. This type of consumer outlook will have strong implications for how we dress, shop, and even socialize during the holidays. Sweatshirts, sweatpants, active bottoms, sleepwear, and socks are forecasted to make up 31% of total U.S. apparel spending over the holidays, compared to 26% in the fourth quarter of 2019. From cozy loungewear to active glam and pajama-inspired fashion, consumers not only will dress differently, but they also will be more selective with their apparel holiday-gifting choices. Social selling will elevate online sales by creatively speaking to one’s unique consumers, and this will be further strengthened by shoppers’ desire to make new human connections while shopping from home.
Stephen Baker
Vice President, Industry Advisor
In a year when technology has played an even more crucial role in keeping people connected, it should not be surprising that technology revenue has been up 25% over the last six months. Now, as we head into the fourth quarter, and then into 2022, we’re forecasting technology sales will remain strong, with 18% revenue growth. COVID-19 has renewed recognition of the critical value of technology in the modern lifestyle, unleashed pent-up demand for modern devices, sped up product upgrade cycles, and created larger installed bases that will benefit the industry moving forward.
Joe Derochowski
Industry Advisor, Home and Home Improvement
We often think about holiday sales as being related to gift giving. While I expect small appliances, like air fryers, coffeemakers, robotic vacuums, and electric toothbrushes, to be among the hot holiday gifts, I also expect the home industry to benefit from consumers’ desire to be with family and friends, despite COVID-19-related concerns. Whether smaller or virtual gatherings, the desire to be together will lead to more meals, appetizers, desserts, snacks, beverages, and house cleaning. This opens the door for more home product purchases that go beyond gifting. Gifting an item bought for oneself might also be a great conversation piece for friends and relatives in similar predicaments.
Juli Lennett
Industry Advisor, Toys
The toy industry has had explosive, double-digit growth so far this year as parents looked to toys to keep their kids engaged for long periods of time as well as physically active in safe ways. With the holiday season upon us, gifting from others, besides Mom and Dad, becomes more important to the toy industry. As more than half of consumers say they will spend the holidays with fewer family and friends, they are turning to gift cards, and more people than ever before will buy gift cards this year. As a result, the holiday shopping season could extend into January in a more significant way. It also means children who receive gift cards will make the purchase decision; they will be able to buy exactly what they want and didn’t already get from others. This is a big opportunity for savvy marketers who can pivot their plans to extend the holidays into January and reach the kids who will be figuring out how to spend their gift cards, hopefully on new toys.