Holiday spending in the United States is projected to decline this year, particularly in the apparel and accessories industry. A recent report from KPMG reveals that the financial strains caused by the COVID-19 pandemic have led to an 18% decrease in holiday shopping budgets. Consequently, per consumer spending is expected to drop from $627 in 2019 to $515 in 2020.

The apparel and accessories sector will be one of the hardest-hit, with consumers planning to spend 27% less on these items. Spending on electronics and gift cards is also anticipated to decrease by 16% and 14% respectively. These changes in consumer behavior can largely be attributed to the uncertain economic climate brought about by the pandemic.

However, despite the overall decrease in spending, there has been a significant increase in online shopping. E-commerce platforms are expected to witness a 25% surge in online spending on apparel and accessories compared to the previous year. This suggests that the trend of digital purchasing is continuing to grow across various retail sectors.

Scott Rankin, KPMG’s national advisory leader for consumer and retail, warns that traditional brick-and-mortar retailers may be disappointed as the shift to online shopping persists. Consumers are adapting to new shopping habits due to the pandemic, and these changes are likely to endure into 2021 and beyond.

The decrease in holiday spending can be attributed to various factors. The survey conducted by KPMG shows that approximately one-third of respondents have been negatively impacted by the pandemic in terms of employment status. Furthermore, 36% of consumers reported a decrease in income, resulting in an average reduction of 34%. Additionally, 19% of respondents stated that they have become more cautious with their spending due to the ongoing health crisis.

Rankin explains that consumers are prioritizing essential purchases for their homes and gifts for immediate family members. Given the significant uncertainty and reduced household income, this cautious approach to holiday spending is understandable. The long-term effects of the COVID-19 pandemic are expected to leave a lasting impact on the retail sector, as consumers form new shopping habits that are likely to continue beyond 2020.

As retailers prepare for the holiday season, they must navigate the challenges posed by reduced consumer spending. Adapting to the changing landscape of online shopping and reassessing marketing strategies will be essential in ensuring business stability during these uncertain times.

(Useful links:
1. National Retail Federation – Winter Holidays
2. Digital Commerce 360 – E-commerce Sales Surge in Q2)