Consumers Say They Will Cut Holiday Gift Spending 14 Percent Due to Pandemic

BOSTON, Dec. 10, 2020 /PRNewswire/ -- U.S. consumers report that they will spend 14 percent less on holiday gifts this year, cutting their budgets to $400 per person, down from $465 per person in 2019, according to a new survey of Americans by L.E.K. Consulting and Civis Analytics.

The reason is the pandemic. Forty-four percent said they had less disposable income available in 2020 than in 2019 as a result of COVID-19, and 43 percent said they were concerned about their finances and future income security.

Consumers plan to cut their gift lists – 48 percent said they were giving gifts to fewer people this year – and radically change the way they shop as the coronavirus wipes out yet another set of holiday traditions.

That's according to the fifth COVID-19 Consumer Insights Survey by global management consulting firm L.E.K. Consulting and data science firm Civis Analytics. The survey of approximately 2,400 U.S. consumers, conducted November 16, is among the first to give insight into consumers' holiday shopping intentions, adding weight to trends in retailers' reported data.

Lower-income consumers are the most concerned and are planning the deepest cuts in holiday gift spending. Consumers earning less than $50,000 a year said they'd cut their gift buying by 20 percent compared to 2019. But consumers at all income levels plan to tighten their spending. Those earning $50,000 to $149,000 a year expect to reduce spending on gifts by 14 percent, and those earning $150,000 or more a year will cut their spending by 7 percent.

Consumers say those cuts are directly tied to COVID-19 – they report their income was reduced by 11 percent in 2020 specifically as a result of the pandemic, and 8 percent had lost jobs.

"Consumers will clearly be celebrating and giving gifts, but their celebrations will be subdued," said Manny Picciola, Managing Director at L.E.K. Consulting. "It's possible that they are planning to give fewer gifts in part because they are traveling and visiting less. But for many, the motivation is financial. Like so much else this year, the holiday season will suffer under the economic weight of the pandemic."

Holiday shopping patterns will change as consumers avoid crowds and go online

The pandemic is also changing the way consumers shop for gifts, the survey shows. They plan to avoid retail stores, especially those with high traffic, and minimize their in-store time, while shifting more of their buying to online channels.

Notably, UPS has imposed shipping restrictions on major retailers including Nike and The Gap, as the surge in pandemic-driven online shopping strains the capacity of their delivery network.

Consumers expect to do 52 percent of their holiday gift shopping in stores. That's down 12 percentage points from a year ago. Forty-three percent will opt for online retailers with home delivery – an increase of 10 percentage points from 2019.

As with their gift-giving plans, consumers' choice of retail channels is directly due to the pandemic. Of 1,575 consumers who answered a question about how COVID-19 would change their shopping behaviors:

• 54 percent said they were seeking to avoid malls and shopping center with high traffic.
• 51 percent said they were seeking to minimize their time in stores.
• Only 19 percent said they were planning to stick with their typical holiday shopping practices despite knowing that COVID-19 remains a risk.
• 20 percent said they planned to shift their shopping to small mom-and-pop stores instead of national chains, and 14 percent said they were planning to shop more at outdoor complexes as a result of the pandemic.

"Consumers' plans for holiday shopping are consistent with their other behavior changes – overall, they are spending less and shifting their shopping online. But the result will be a very different and much more subdued holiday season," said Maria Steingoltz, Managing Director at L.E.K. Consulting. "Online retailers can expect to do well, but consumers are suffering and they are wary. Retail as a whole will feel the impact."

About L.E.K. Consulting

L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently make better decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global companies that are leaders in their industries — including the largest private and public-sector organizations, private equity firms, and emerging entrepreneurial businesses. Founded in 1983, L.E.K. employs more than 1,600 professionals across the Americas, Asia-Pacific and Europe. For more information, go to www.lek.com.

About Civis Analytics

Civis Analytics helps leading public and private sector organizations use data to gain a competitive advantage in how they identify, attract, and engage people. With a blend of proprietary data, technology and advisory services, and an interdisciplinary team of data scientists, developers, and survey science experts, Civis helps organizations stop guessing and start using statistical proof to guide decisions. Learn more about Civis at www.civisanalytics.com.

Media Contact:

Michael-Jon Romano
Sommerfield Communications
+1 (212) 255-8386
[email protected]

SOURCE L.E.K. Consulting

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