How shoppers will spend this festive season

‘Tis the season to be jolly… but with interest rates rising and inflation soaring, many retailers may be wondering just how jolly this festive period will be.

The good news, according to Afterpay and Square’s new Festive Forecast report, is that while Americans are undoubtedly being impacted by inflation, over a third of shoppers plan to increase their spending during the festive period.

Afterpay’s Festive Forecast surveyed 1000 Americans, who were nationally representative across gender, age and location, as well as 500 Millennials and Gen Z shoppers. It uncovered a wealth of information about how and when shoppers will spend this holiday season, not to mention what they’ll buy.

The report also confirmed that although the challenges this holiday season are real, the opportunities are vast, as long as retailers understand the shopper mindset,

Festive Forecast findings, at a glance:

• 78% of shoppers will spend the same or more compared to last year
• 77% of Americans will have all their shopping done by December 
• Gift cards will be the most popular gift to give, especially among older generations
• Gen Z and Afterpay users are particularly excited about the festive season
• 43% of shoppers turn to family and friends for gift inspiration
• 44% of consumers say that sales prompt them to purchase
• One in six Americans plans to use a BNPL service

Spending remains resilient 

The Festive Forecast confirmed that Americans are feeling the impact of rising rates and inflation, and found that more than a third are cutting back on general purchases (38%), canceling or stopping certain activities such as subscriptions (24%), and reducing how much they save (21%).

But few plan to cut back on festive shopping. In fact, the majority will be spending the same – or more – than last year, with 42 percent planning to spend the same as last year, 25 percent spending slightly more and 11 percent spending significantly more.

Where shoppers are getting gift inspiration

When it comes to gift ideas, family and friends are the top sources of inspiration (43%), followed by simply being in-store (37%). Social media is another important influence, with around one in four shoppers spotting gift ideas on Facebook (27%) or Instagram (24%). 

Sales drive sales

Another shopping cue? Noticing that a product is on sale. Roughly 44% of consumers say that sales prompt them to purchase, while nearly one in three (28%) Americans also say they’d be compelled to shop during a sale event like Cyber Monday - suggesting that Black Friday Cyber Monday (BFCM) is poised to be a major opportunity for retailers this year, particularly among younger shoppers.

Gift cards are a go

Gift cards are once again the most popular gift idea among shoppers, followed by clothing, footwear and accessories and children’s toys. Gift cards are especially popular for older shoppers.

Hello big spenders

One in six shoppers plan to use a BNPL service like Afterpay, citing budgeting and immediacy as reasons. Younger shoppers are especially likely to use BNPL. 

Shoppers with bigger gifting budgets are more likely to have used Afterpay in the past — and to use it in the future. Why? Many say they enjoy the fast checkout experience and want to avoid waiting to make a purchase.

So it pays to ensure that Afterpay is clearly displayed and promoted, whether you run an e-commerce or brick-and-mortar store.

For more insights into consumer behavior during the festive period, you can read the full report here.