Consumer Spending Expected to Decline This Holiday Season, Alvarez & Marsal Report Finds
TL;DR
Consumers are demonstrating greater loyalty to stores over brands, challenging the conventional notion of brand loyalty. Retailers must deliver clear value to win their business.
Alvarez & Marsal’s Consumer and Retail Group released its latest consumer report, which analyzes how shifting economic conditions have shaped consumer spending patterns over the past year.
To appeal to value-focused consumers, retailers can optimize their omnichannel experience and pricing structure to match evolving shopper priorities and spending plans.
Consumers are expected to pull back their spending across all major holiday spending categories this year, gravitating towards online platforms for their holiday purchases.
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Consumers are expected to tighten their belts this holiday season, according to a new report from Alvarez & Marsal's Consumer and Retail Group. The Fall 2024 Consumer Sentiment Survey, which polled over 2,100 U.S. adults, indicates a continued trend of conservative spending habits that began during last year's holiday season.
The report highlights several key findings that could have significant implications for retailers and the broader economy. Notably, consumers across all income brackets are planning to spend less this holiday season compared to Fall 2023. Lower-income households (earning less than $100,000 annually) are projecting a 13% decrease in spending, while higher-income households are focusing more on saving, with plans to increase savings by 4%.
Chad Lusk, Managing Director at Alvarez & Marsal's Consumer and Retail Group, emphasized the shift in consumer behavior, stating, "In today's cost-conscious market, consumers are doing more research and spending less. Retailers must deliver clear value to win their business." This trend is likely to challenge retailers to adjust their strategies to align with evolving shopper priorities and spending plans.
The survey also revealed that inflation, interest rates, and the job market are the top three macroeconomic factors influencing consumer spending decisions. These concerns are driving consumers to seek out more value-oriented shopping options, with many planning to purchase less expensive gifts or wait for sales before making purchases.
Interestingly, the report noted a shift in consumer loyalty from brands to stores, potentially disrupting traditional notions of brand loyalty. This change could have far-reaching consequences for brand marketing strategies and retail partnerships.
While in-store shopping remains the primary channel for holiday purchases, the survey indicates a growing trend towards online platforms. This shift underscores the importance for retailers to optimize their omnichannel experiences to meet evolving consumer preferences.
As the holiday season approaches, retailers will need to navigate these changing consumer behaviors carefully. The report suggests that offering clear value propositions, optimizing pricing structures, and enhancing both in-store and online shopping experiences will be crucial for success in this challenging economic climate.
The findings of this report have broader implications beyond the retail sector. The continued conservative spending habits of consumers could potentially impact economic growth and inflation rates, making this trend an important indicator for policymakers and economists to monitor in the coming months.
Curated from News Direct
