Why it matters:

• With total holiday spending expected to grow by a modest 2.5% to 3.5% — a smaller percentage than last year — businesses need to work harder to win a share of shoppers’ budgets.
• Value will be top of consumers’ minds, with nine out of 10 consumers saying inflation will impact their spending. But shoppers aren’t just looking for low prices. They also define value in terms of quality, as well as loyalty rewards and cash-back offers.
• While e-commerce sellers are expected to be the big winners this year, 92% of consumers are planning to shop in stores, and 52% are expected to be last-minute shoppers — two advantages for local businesses.

The good news for businesses heading into the peak shopping season is that Americans are expected to spend a record amount – close to $1 trillion — on holiday gifts, celebrations, and related purchases this year. The bad news is the competition for those dollars will be tougher than ever, as consumers today are laser-focused on finding deals and armed with more price-comparison tools than in the past.

Consumers are planning to spend an average of $902 per person on gifts, food, decorations, and other holiday items, up $25 from last year, and $16 higher than the previous record set in 2019, according to a survey by the National Retail Federation.

Online purchases, social media shops, and the Temu, Shein, and TikTok Chinese shopping apps, however, are expected to take a growing share of holiday purchases, Salesforce reported in its holiday forecast.

Here are the must-know trends that will shape the way your customers spend this holiday season:

Shoppers want value for their money and will tap AI tools to hunt down deals

While retail forecasters are optimistic about shoppers’ abilities to spend big during this holiday season, consumers say they are still feeling strapped due to inflation and worried about the economy. Two-thirds of shoppers plan to create a budget for holiday spending, and 81% saying they plan to spend the same or less on gifts this year, according to the 2024 Holiday Shopping Trends survey by coupons and discounts shopping app Smarty.

Gen Z and millennial shoppers are determined to shop smarter this year and take advantage of deals, according to the Smarty survey. Nearly half of both groups — 49% of Gen Z and 48% of millennials — plan to purchase gifts only when they are on sale.

Shoppers also have new deal-hunting tools in the form of AI shopping assistants that can compare prices or suggest gift ideas. Over half of shoppers surveyed by Salesforce for its holiday forecast said they are interested in using AI to find gifts as well as price comparisons and holiday budgeting.

Loyalty programs matter even more: Perks and rewards drive purchases

Value in 2024 isn’t defined strictly by price. A growing number of consumers are saying that loyalty program perks and cash-back offers influence where and what they buy.

Eighty percent of consumers plan to take advantage of cash-back offers to stretch their holiday budgets, the Smarty survey found.

Ankura Consulting Group found in its holiday survey that 65% of consumers across demographic groups, from baby boomers to Gen Z, are influenced by loyalty programs when choosing where to buy gifts.

Gen Z and millennial shoppers in particular are fans of loyalty programs, e-commerce fraud protection company Forter found in its holiday trends research.

More than three-fourths of both groups — 78% of Gen Z consumers and 79% of millennials — believe that a brand’s loyalty program is important when deciding where to shop, Forter reported.

Ankura recommended in its holiday trends report that businesses focus on enhancing and promoting their loyalty programs to attract and retain customers during the competitive holiday season.

[Read: 5 Marketing Insights to Spur Sales This Holiday Season]

Shoppers also have new deal-hunting tools in the form of AI shopping assistants that can compare prices or suggest gift ideas.

Shopping like it’s 2019 — in person and in stores

The ICSC, the trade group representing the shopping center industry, is expecting people will shop like it’s 2019 this year.

It’s predicting that in-person, in-store shopping will return to levels not seen since before the pandemic.

The ICSC’s annual holiday consumer intentions survey showed that 92% of shoppers plan to make purchases in a physical store during the holiday season, up from 87% last year. It is the highest percentage of consumers planning to shop in stores since 2019, the ICSC reported.

ICSC President and CEO Tom McGee sees that return to in-store shopping as a sign that retailers are creating synergies between their online and physical presences.

“Stores are increasingly not used just for traditional shopping,” McGee said when the survey results were released. “They’re an opportunity to build a relationship with your customer as well as sell goods.”

The retailers “that are really effective at merchandising both in the store and online and complementing each other and making that experience really frictionless” will be the winners this holiday season, McGee said.

A last-minute shopping surge: tapping the ‘Procrastination Nation’ crowd

While consumers typically say every year that they plan to get their shopping done early, the reality is that most of them don’t.

This year, there are a number of reasons to expect a last-minute shopping surge, including fewer days between Thanksgiving and Christmas due to Thanksgiving falling on November 28, and Cyber Monday not arriving until December 2.

Price-conscious consumers also are telling researchers that they believe they will get better deals if they wait until just before the holidays.

And, according to a report by online gift company Edible, Americans have a natural tendency to procrastinate, a phenomenon Edible dubbed, “Procrastination Nation.” That tendency, the report said, has been fed by the growing reliance on same-day and next-day delivery services.

Sensormatic Solutions, the company that helps retailers track store traffic, is predicting that last-minute shoppers will show up again this year, with December 21 to 23 being the second, third, and fourth busiest shopping days of the season behind Black Friday.

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