ARTICLE
At Tuesday’s Santa Cruz City Council meeting, the Council declared a Mayoral proclamation that Saturday, November 25, 2023 is “Small Business Saturday” and encourages all citizens to join in shopping locally today and throughout the year. We know that holiday shopping has traditionally started the day after Thanksgiving, but over the years, the growing sales on Black Friday and early sales programs have become the new norm with online shopping. Economists tend to believe in actions over words. As an example, you can insist that you prefer a vegetarian diet, but if you keep eating hamburgers, we (the economist) will conclude that you actually prefer an omnivore diet. So if you say the economy is terrible but spend like it’s 1999, some economists will tend to trust what you do over what you say — and question the reliability of financial polls. So what is the forecast and economic outlook for the 2023 holiday season? According to the latest polls of the 2023 holiday spending, these key themes have emerged. Almost 40% of consumers will spend more overall than they did last year, and those households' incomes of $120,000 or more will exceed an average of $3,000. A PWC poll says it distinctly, “shoppers want everything everywhere … all at discounts.” Consumers are bargain hunters so local retail businesses must be wary of the consumers’ buying habits. Most will browse first in a store, then to fine-tune their purchase choices will turn to a variety of online options — search engines, online marketplaces, brand sites and social media. Some consumers in mostly high-income areas will turn to emerging technologies such as AI to help find that ‘right gift.’ Consumers will increase spending by a healthy 7% this year and allocate up to $1,500 for gifts, travel and holiday entertainment. What is the potential breakdown by various generations? While millennials are considered at the top of the holiday spending heap, Gen Z consumers (17-25 year olds) are starting to expand their buying power. PWC poll again states that Gen Z will spend up to $1,275, a 15% jump in 2022. Gen Z likes to browse for gift ideas in stores (67% v 58% overall) and on social media (41% v 31%). They also prefer social media for comparison shopping (34% v 27%) and learning about sustainable companies (70% v 51%). Mobile payment is their speed (35% v 21%). More than 75% of consumers are on the hunt for deals this holiday, as part of their effort to counteract price increases. Aware that a pre-season of holiday deals is increasingly becoming the norm, they are biding their time while waiting for the best deals. Most will do the bulk of their shopping in early November while some will hold out for Black Friday sales. Meanwhile, those who plan ahead have already stocked up on gifts during ongoing midyear sales because they found what they wanted at the right price. Across generations, home delivery remains widely popular and in-store and curbside pickup has stabilized recovering from the pandemic. Ultimately, consumers want to be able to select a combination of physical and digital options for the ‘ideal’ shopping experience. The bottom line for the holiday shopping season: consumers want convenience either in-store or online and at the right price. If the consumer can’t find what they are looking for, they move the shopping experience to another store or another online place. Economists focus on inflation, the rate at which prices are rising. Consumers tend to focus on the actual prices themselves. The challenge is that, even with inflation under control, prices will stay high. This helps explain why 35% of Americans said in a May poll that inflation and the high cost of living were their “most important financial problem.” And yet that very same inflation has also boosted incomes, which have risen even after adjusting for inflation. This may explain why Americans keep spending even as they complain about inflation. To our local Santa Cruz County merchants, retail shops, restaurants and our hospitality sector, shopping locally will need to be a market-placed strategy that is promoted by businesses within the regional Chambers and the Downtown Associations to encourage the “Santa Cruz experience.” We all have to do our part to make the 2023 holiday season a successful one.
At Tuesday’s Santa Cruz City Council meeting, the Council declared a Mayoral proclamation that Saturday, November 25, 2023 is “Small Business Saturday” and encourages all citizens to join in shopping locally today and throughout the year. We know that holiday shopping has traditionally started the day after Thanksgiving, but over the years, the growing sales on Black Friday and early sales programs have become the new norm with online shopping.
Economists tend to believe in actions over words. As an example, you can insist that you prefer a vegetarian diet, but if you keep eating hamburgers, we (the economist) will conclude that you actually prefer an omnivore diet. So if you say the economy is terrible but spend like it’s 1999, some economists will tend to trust what you do over what you say — and question the reliability of financial polls.
So what is the forecast and economic outlook for the 2023 holiday season? According to the latest polls of the 2023 holiday spending, these key themes have emerged. Almost 40% of consumers will spend more overall than they did last year, and those households' incomes of $120,000 or more will exceed an average of $3,000. A PWC poll says it distinctly, “shoppers want everything everywhere … all at discounts.” Consumers are bargain hunters so local retail businesses must be wary of the consumers’ buying habits. Most will browse first in a store, then to fine-tune their purchase choices will turn to a variety of online options — search engines, online marketplaces, brand sites and social media. Some consumers in mostly high-income areas will turn to emerging technologies such as AI to help find that ‘right gift.’ Consumers will increase spending by a healthy 7% this year and allocate up to $1,500 for gifts, travel and holiday entertainment.
What is the potential breakdown by various generations? While millennials are considered at the top of the holiday spending heap, Gen Z consumers (17-25 year olds) are starting to expand their buying power. PWC poll again states that Gen Z will spend up to $1,275, a 15% jump in 2022. Gen Z likes to browse for gift ideas in stores (67% v 58% overall) and on social media (41% v 31%). They also prefer social media for comparison shopping (34% v 27%) and learning about sustainable companies (70% v 51%). Mobile payment is their speed (35% v 21%).
More than 75% of consumers are on the hunt for deals this holiday, as part of their effort to counteract price increases. Aware that a pre-season of holiday deals is increasingly becoming the norm, they are biding their time while waiting for the best deals.
Most will do the bulk of their shopping in early November while some will hold out for Black Friday sales. Meanwhile, those who plan ahead have already stocked up on gifts during ongoing midyear sales because they found what they wanted at the right price.
Across generations, home delivery remains widely popular and in-store and curbside pickup has stabilized recovering from the pandemic. Ultimately, consumers want to be able to select a combination of physical and digital options for the ‘ideal’ shopping experience.
The bottom line for the holiday shopping season: consumers want convenience either in-store or online and at the right price. If the consumer can’t find what they are looking for, they move the shopping experience to another store or another online place.
Economists focus on inflation, the rate at which prices are rising. Consumers tend to focus on the actual prices themselves. The challenge is that, even with inflation under control, prices will stay high. This helps explain why 35% of Americans said in a May poll that inflation and the high cost of living were their “most important financial problem.” And yet that very same inflation has also boosted incomes, which have risen even after adjusting for inflation. This may explain why Americans keep spending even as they complain about inflation.
To our local Santa Cruz County merchants, retail shops, restaurants and our hospitality sector, shopping locally will need to be a market-placed strategy that is promoted by businesses within the regional Chambers and the Downtown Associations to encourage the “Santa Cruz experience.” We all have to do our part to make the 2023 holiday season a successful one.