McKinsey survey: US holiday spending to grow by double digits

Given current consumption trends and consumers’ optimistic outlook, McKinsey predicts strong holiday consumer demand in 2021. Consumer spending in the fourth quarter of 2021 is likely to increase by 7% compared to 2020 and 9% compared to 2019, driven primarily by high-income earners and younger consumers.

50% of respondents earning at least $100,000 a year and 47% of millennials said they are excited for the holidays. Spending by high-income consumers is expected to increase 15% year-over-year, while millennials will see spending increase 10% year-over-year. In contrast, lower-income consumers are expected to spend less as stimulus checks and extra unemployment benefits fade.

In terms of categories, spending in many discretionary categories is likely to see double-digit growth in the fourth quarter, including sportswear, cosmetics, software and electronics, and retail apparel.

In addition, online spending will continue to increase. Compared with last year, almost half of the respondents expect to increase their online spending. McKinsey expects that online penetration will grow at a rate of 30% throughout the holiday season .

And many consumers will seek shopping inspiration on social media. 58% of respondents said that social media will influence their holiday purchase decisions. Among them, the platform with the greatest influence on consumers is Facebook, followed by YouTube and Instagram. But if only young consumers are considered, the situation will be different. YouTube, Instagram and TikTok are the most important sources of inspiration for Generation Z.

It is important to note that due to continued supply chain issues and concerns about the epidemic, many consumers intend to shop early, with about 40% of respondents saying they expect to start shopping earlier than in 2020. Only 11% of respondents said they would wait until December to start shopping. In the years before the epidemic, more than 25% of consumers said they shopped a few weeks before Christmas.

They are also more willing than ever to switch brands or retailers , especially when an item is unavailable. Of the 60% of respondents who experienced an out-of-stock product in the past three months, only 13% said they waited for the item to be back in stock, while 70% switched retailers or brands instead.

Therefore, retailers are also facing challenges during this holiday season. Maintaining customer loyalty has become a top priority for retailers. McKinsey also gave several suggestions.

Retailers can communicate with consumers early and often , such as alerting them to potential inventory challenges and suggesting that they place orders early; when unexpected supply chain issues arise, they can convey alternative options and information about product restocking. In addition, retailers can promote their marketing plans , such as promotions, early .

USA

Holiday Survey