How US consumers plan to shop this holiday season: inflation, budgets, and demographic differences

• Location: US and Canada
• Age: 18+
• Responsible for budgeting and making purchasing decisions
• At least 33% have children
• Even distribution across income brackets

• Who: survey respondents born between 1946-1964, during the post-World War II “baby boom”
• What they’ll spend: The majority of boomers (55%) spend between $250-999 on holiday gifts each year, and for most (62%), that won’t change this year.
• Of the 6% who plan on increasing their holiday spending, over a third (35%) of boomers will spend $250-499 more. Of the 32% who plan on reducing their holiday spending, 30% will spend $250-499 less.
• Where they’ll spend it: Most boomers have fully embraced online shopping: 41% plan to split their holiday shopping 50/50 between online and in-person this year, and 30% plan to do 75% of it online. For most boomers (73%), this won’t be different from their shopping habits last year.
• This year, boomers plan to increase their spending on discretionary purchases in sectors like hobbies (57%), fitness (50%), and jewelry (50%), but also in essential areas like health products (48%) and food, beverages, and groceries (45%).
• Why: Inflation is affecting spending decisions for 66% of boomers and will affect future spending decisions for 20% of boomers, according to the survey. Besides the affluent (22%), boomers are the most likely demographic (14%) to say inflation is irrelevant to their current and future spending decisions.

How to convert more boomers this holiday season:

“You might be thinking, ‘OK boomer,’ but this is not a segment to ignore this holiday season,” says Bonnie Pecevich, director of product marketing at Pantastic. “That’s because boomers’ attitude towards spending is very similar to another valuable group—the affluent.”

“Not only did a similar proportion of boomers report that inflation won’t influence their spending, they’re also one of the few segments that plans to increase their spending more in non-essential areas—like hobbies, fitness, and jewelry—than in essential areas,” Pecevich points out. “As some of the younger demographics think about spending less in comparative areas, brands can ensure they have a successful holiday season by capturing sales from boomers.”

One key way to do this: serving a personalized shopping experience with relevant product recommendations.

“AI-powered product recommendations provide accurate recommendations by using data from a variety of criteria including, but not limited to, demographics, geography, customer spending behaviors, and product purchase behaviors,” Pecevich explains. “These can all work together to create compelling product recommendations like ‘most popular’ and ‘what’s new,’ and also serve opportunities to cross-sell, up-sell, and bundle. With personalization, you can identify a boomer who lives in Florida vs. Colorado and know what apparel and seasonal hobby items to show them.”

Considering a similar proportion of boomers plan to shop online this year as younger generations, “these investments into personalization don’t just serve certain segments,” Pecevich says. “They help you maximize your chances at converting every customer.”

• Who: survey respondents born between 1981-1996
• What they’ll spend: Like boomers and Gen X, the majority of millennials (51%) spend between $250-999 on holiday gifts each year. But unlike boomers and Gen Xers, millennials are far more split on whether they’ll spend more (21%), the same (50%), or less (29%) this year. Of the 29% who plan on reducing their holiday spending, 28% will spend $250-499 less. Of the 21% who plan on increasing their holiday spending, 27% will spend $250-499 more.
• Where they’ll spend it: Defying their reputations as digital natives and social media addicts, most millennials (40%) will also take a hybrid approach to their holiday shopping this year, splitting it 50/50 between online and in-person. Almost the same proportion (39%) plans to do 75% of it online. Millennials are tied with Gen Z at 2% for the least amount of any demographic that plans to do their holiday shopping 100% in person. For most millennials (61%), this won’t be different from their shopping habits last year. This year, millennials will spend more on essentials like health products (58%) and food, beverage, and groceries (49%), but also discretionary purchases in sectors like fitness (54%), jewelry (43%), and electronics (38%).
• Why: Millennials seem to share the same perspective on inflation as their slightly older peers: Inflation is already affecting spending decisions for the same proportion of millennials as Gen Xers (73%) and will affect future spending decisions for 20%, according to the survey.Half as many millennials as boomers (7% vs. 14%) say inflation is irrelevant to their current and future spending decisions.

How to convert more millennials this holiday season:

According to Jen Brennan, director of digital marketing at Northern Commerce, millennials “are one of the most valuable audiences available to brands. Understanding their needs and what drives their purchase decisions is a critical component to Cyber Week success.”

Brennan says brands can encourage purchase conversions by catering to the unique shopping habits and preferences of millennials. As millennials continue to seek out experiences that prioritize pleasure over function, “there is increased search volume happening around travel and tourism, restaurants, apparel and accessories, as well as beauty and personal care,” Brennan points out. Meanwhile, “search volume is decreasing this season for subscriptions, home appliances, consumer electronics, home decor, and food and groceries.”

With this in mind, “brands should consider how to add value and trust-building into their marketing efforts this holiday shopping season,” Brennan advises. “Increasing the perceived (or actual) value and risk associated with purchases and focusing on the experience your brand delivers can significantly reduce millennial hesitation.”

Brennan also recommends implementing easy and transparent return policies, free shipping offers, and interest-free payments through services like Afterpay and Klarna—all of which “can make a big difference in capturing conversions amid rising inflation costs and don’t require steeper discounts to products and services.”

Understanding the customer journey of your millennial shoppers is equally important, says Brennan, who encourages brands to take the time to collect data and analyze insights in order to tailor touchpoints to millennial preferences.

“Consider how you can reduce friction in their path to purchase by focusing marketing resources on cross-channel experiences,” Brennan suggests. “Think social media, SMS, email, and web—common channels millennials use to inform their purchasing decisions.”

“By evaluating their customer journey, you may find your millennial shoppers are turning to new channels, such as SMS and TikTok, more than they have before,” Brennan points out. “This creates an opportunity for brands to personalize the shopping experience for millennial consumers based on their needs and preferences.”

Millennials, Brennan says, are positioned to “make or break your success” this quarter. “With their high purchasing power,” she explains, “it’s important to both understand and cater to millennial shopping habits in order to increase your revenue and develop customer lifetime value from this important audience.”

• Who: survey respondents who self-described as in a relationship or married
• What they’ll spend: The majority of people in relationships (51%) spend between $250-999 on holiday gifts each year. About half (56%) of couples plan to spend the same amount this year, while 32% plan to spend less. Of the 32% who plan on reducing their holiday spending, 29% will spend $250-499 less. Of the 12% who plan on increasing their holiday spending, 31% will spend $250-499 more.
• Where they’ll spend it: Most couples (41%) will take a hybrid approach to their holiday shopping this year, splitting it 50/50 between online and in-person. 36% plan to do 75% of it online. For most couples (67%), this won’t be different from their shopping habits last year. This year, those in relationships will spend more on essentials like health products (56%) and food, beverage, and groceries (55%), but also discretionary purchases in sectors like jewelry (56%, compared to only 20% of single people), fitness (47%), and electronics (42%).
• Why: Inflation is already affecting spending decisions for 72% of couples and will affect future spending decisions for 19%, according to the survey. Only 9% of those in relationships say inflation is irrelevant to their current and future spending decisions.

How to convert more couples this holiday season:

“This year, like every year, thousands of partners will be searching for the perfect present for their loved one,” says Jen Brennan, director of digital marketing at Northern Commerce. “Choosing a gift is often easier said than done, so let’s make sure that the path to purchase is seamless for your coupled-up customers.”

When shopping for a significant other, some of the most common questions people face include “Will it fit?” and “What if they don’t like it?” “While the easiest answer would be to encourage couples to outright ask their partner, that removes the surprise and delight of the holidays,” Brennan points out.

How can your brand help? Brennan recommends the following:

• Offer holiday or virtual fit guides to help gift buyers with their purchase decision, “including popular products, social proof through reviews and user-generated content, and other conversion-assisting prompts, such as special coupon offers or incentives for the holiday shopping season,” Brennan advises.
• Add a gift card option to your ecommerce storefront for the “pickier or more indecisive shoppers, especially those buying for their especially particular partner,” Brennan suggests. “Gift cards can be a great way to create a repeat site or in-store visitors and create a personalized shopping experience for the gift recipient—your ultimately ideal customer and subscriber.”
• Develop an online wishlist tailored to shareable content that gift recipients can send to their partner or someone close to them “with a gentle nudge for holiday buying inspiration,” Brennan recommends. “Even social sharing icons can be a quick and easy way to capture shopping lists, including Pinterest, which is a popular planning tool for many online shoppers.”

If your business isn’t able to offer these solutions, “ensure that you’re able to offer an easy and free return policy for added assurance for consumers,” Brennan advises. “We’ve all made gifting mistakes. Allow your customers to make their purchase with confidence.”

• Who: survey respondents with children under the age of 18 living in their households
• What they’ll spend: While exactly half of parents, like many other demographics, spend $250-999 on holiday gifts each year, a significant portion of them (40%) spend over $1K—more than any other demographic in our survey, besides those with household incomes above $100K. And parents are fairly split about whether they’ll change their spending habits this holiday season. About half (51%) say they’ll spend the same amount, but 32% plan on spending less, and 17% plan on spending more. Of the 32% who plan on reducing their holiday spending, 28% will spend $250-499 less. Of the 17% who plan on increasing their holiday spending, 30% will spend $250-499 more.
• Where they’ll spend it: Most parents (42%) will take a hybrid approach to their holiday shopping this year, splitting it 50/50 between online and in-person. 38% plan to do 75% of it online, and only 3% plan to do 100% of it in person. For most parents (63%), this won’t be different from their shopping habits last year. Parents will spend more on essentials like food, beverage, and groceries (58%) and health products (57%) this year, as well as discretionary purchases in sectors like fitness (52%), jewelry (50%, compared to only 25% of non-parents), and electronics (48%, compared to only 24% of non-parents).
• Why: Inflation is already affecting spending decisions for 74% of parents—more than any other demographic group in our survey, besides those with a household income <$75K (76%). (Those with a household income between $75K-100K, Gen X, and millennials are a close third at 73%.) 19% of parents expect inflation to affect their future spending decisions, and only 7% of parents say inflation is irrelevant to their current and future spending decisions.

How to convert more parents this holiday season:

“Lean into the data with parent shoppers,” suggests Vanessa Petersen, content at WooCommerce. “Based on conversations in online parenting communities, this demographic has become increasingly selective about the products that enter into their childrens’ everyday lives. Reviews, validation, and social proof are key for building top-selling products this holiday season.”

Social listening, Petersen says, can provide “valuable insight into what parents care about, which products are most popular (or unpopular), and which stories and marketing are resonating best. You can also use your own data to make marketing decisions. Look at past purchases for children and target previous buyers with items for slightly older kids. Tag products’ meta data by age group, so that you can cross-sell related gifts.”

Finally, “appreciate parents for how busy they are during the holidays. Make their gift-buying simple,” Petersen advises. “Show and encourage reviews on product listings, up-sell with gift-wrapping options, curate sets of gifts based on age and interest, and offer opt-in to re-stock alerts and pre-orders. Let parents know that you have their interests and needs in mind.”

• Who: survey respondents with an annual household income <$75K
• What they’ll spend: The majority of people with household incomes <$75K (60%) spend between $250-999 on holiday gifts each year. About half (53%) plan to spend the same amount this year, while 35% plan to spend less. Of the 35% who plan on reducing their holiday spending, 31% will spend $50-199 less—a lower reduction than the most common choice in higher income brackets. And of the 12% who plan on increasing their holiday spending, 30% will only spend $50-199 more—a lower increase than the most common choice in higher income brackets.
• Where they’ll spend it: Similar to most other demographics, 43% of people with household incomes <$75K will take a hybrid approach to their holiday shopping this year, splitting it 50/50 between online and in-person. 28% plan to do 75% of it online. For most (66%), this won’t be different from their shopping habits last year. This year, those with household incomes <$75K will spend more on essentials like health products (50%), but also discretionary purchases in sectors like electronics (70%, the most of any income bracket), fitness (60%), and hobbies (50%—more than double any other income bracket except $200K-500K, also 50%).
• Why: Inflation is already affecting spending decisions for 76% of people with household incomes <$75K—more than any other demographic group in our survey. (Parents are a close second at 74%.) 18% of people with household incomes <$75K expect inflation to affect their future spending decisions, and only 6% say inflation is irrelevant to their current and future spending decisions—the lowest amount of any demographic in our survey.

How to convert more of this income bracket this holiday season:

“Provide early access to sale opportunities to convert them online before they decide to head out for in-person shopping,” suggests Emily Roberts, VP of Retention Marketing at Roswell NYC. “Keep practicality and value top of mind, and increase AOV with ‘buy more get more’ offers and bundles.”

• Who: survey respondents with an annual household income between $100K-150K
• What they’ll spend: Predictably, the more people make, the more they spend on holiday shopping. While most people with household incomes between $100K-150K (49%), like many other demographics, spend $250-999 on holiday gifts each year, a significant portion of them (41%) spend over $1K.  About half (54%) plan to spend the same amount this year, while 32% plan to spend less. Of the 32% who plan on reducing their holiday spending, 27% will spend $250-449 less. Of the 14% who plan on increasing their holiday spending, 33% will spend $250-499 more.
• Where they’ll spend it: Similar to most other demographics, 42% of people with household incomes between $100K-150K will take a hybrid approach to their holiday shopping this year, splitting it 50/50 between online and in-person. 36% plan to do 75% of it online. For most (67%), this won’t be different from their shopping habits last year. This year, those with household incomes between $100K-150K will spend more on essentials like health products (60%) and food, beverage, and groceries (56%). But fewer proportions of this income bracket are likely to increase their discretionary spending: After food, beverage, and groceries, the next most common selections include electronics (just 37%), beauty products (just 36%), and fitness (just 35%).
• Why: Inflation is already affecting spending decisions for 69% of people with household incomes between $100K-150K, and 21% of them believe it will affect their future spending decisions. 10% say inflation is irrelevant to their current and future spending decisions.

How to convert more of this income bracket this holiday season:

As Dan LeBlanc, CEO and co-founder of Daasity, points out, “higher household income does not necessarily mean higher discretionary income.”

“It’s crucial to consider where many of your customers are,” LeBlanc explains. “Households with a total gross income between $100K-150K will likely have more discretionary income in smaller cities and rural areas, but budgets will be tighter for customers in major cities. Some folks (particularly on the lower end of this range) may even be living paycheck to paycheck.”

If you’re a luxury brand, LeBlanc says, “you may generate relatively little revenue from this bracket to begin with, so holiday discounting will not make much of a difference. Your typical shoppers are likely less price-sensitive.”

But LeBlanc advises non-luxury brands, by contrast, to “consider who you are selling to, and discount accordingly. Do you sell more to families or individuals? Both? Families tend to have the least discretionary income in this bracket (consider, for example, families living in more expensive areas making closer to $100K), so they’re going to be bargain hunting early and often.”

Especially given this bracket’s preference for online shopping, LeBlanc recommends:

• Informing customers of discounts starting in mid-October
• Discounting early in November
• Pulling back discounts until BFCM
• Sending your best offers of the season at BFCM (+ free or discounted shipping)
• Pulling back discounting again until closer to Christmas
• Sending your next-best offers closer to Christmas (+ free or discounted shipping)

“This discount flow will preserve overall Q4 margin and increase the chances that customers repurchase,” LeBlanc explains.

Remember, too, that Christmas 2022 falls on a Sunday. “That means there’s a bit more time to ship products,” LeBlanc points out. “Customers may look to buy online as close to Christmas as possible with a delivery date still before Christmas Day. They’re looking to avoid the near-Christmas mall rush and to snag clearance sales and other deep discounts. Take advantage of that in your promotions.”

• Who: survey respondents with an annual household income between $200K-500K
• What they’ll spend: Unlike most other demographics, who spend $250-999 on holiday gifts each year, people with household incomes between $200K-500K are more likely to spend either $500-999 or >$2,000 (25% in each category). 17% spend $1,000-1499, and another 17% spend $1,500-1,999—which means 84% of those with household incomes between $200-500K spend over $500 on holiday shopping each year. Besides boomers (62%), those in this income bracket are most likely out of all demographics to spend the same amount this year (63%). Of the 21% who plan on reducing their holiday spending, 36% will spend $250-449 less. Of the 16% who plan on increasing their holiday spending, 31% will spend >$1,000 more—a significantly higher increase than the most common choice in all other income brackets.
• Where they’ll spend it: Similar to most other demographics, 44% of people with household incomes between $200K-500K will take a hybrid approach to their holiday shopping this year, splitting it 50/50 between online and in-person. 34% plan to do 75% of it online. For most (65%), this won’t be different from their shopping habits last year. This year, those with household incomes between $200-500K will spend more on food, beverage, and groceries (52%). But this income bracket is more likely to increase their discretionary spend in sectors like beauty products (56%), hobbies (50%), and home decor (50%) than in essentials like health products (only 20%—by far the lowest of any demographic in our survey). Only 12% of this income bracket, meanwhile, plans to invest more in electronics. Only 15% plans to invest more in fitness, and only 17% plans to invest more in apparel and accessories.
• Why: Inflation is affecting spending decisions for 57% of people with household incomes between $200K-500K—the lowest proportion of any demographic in our survey. While 21% of those with household incomes between $200K-500K say inflation will affect their future spending decisions, this income bracket is the most likely demographic in our survey to say inflation is irrelevant to their current and future spending decisions (22%). That’s nearly double the amount of boomers at 14%, the next closest demographic, and nearly quadruple the amount of those with household incomes <$75K (6%).

How to convert more of this income bracket this holiday season:

“The common denominator for this audience is a desire for a seamless shopping experience and peace of mind,” says Samantha Santana, digital marketing strategist at Imagination Media.

Santana suggests achieving this by “incorporating a minimalist design, quality differentiation, and clear communication throughout the customer journey. Wow your subscribers through personalization, smart product recommendations, and a VIP experience.”