holiday spending

Report: High-Income Consumers Forge Ahead with Holiday Spending

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The divide between the “haves” and the “have nots” is growing. According to a new report by Havas Media Group and the CX intelligence platform DISQO, the bifurcation in holiday spending intent between lower and higher-income consumers is stark — and it’s only getting larger.

While 40% of lower-income consumers are cutting back on spending during the holiday period, just 27% of higher-income consumers are doing the same. At the other end of the spectrum, the percentage of shoppers who say they’re spending more this year is 25% for lower-income consumers and 41% for those with higher-incomes.

“The realizations around just how cost-conscious consumers are right now really illustrate how thoughtful brands must be,” says Amy Pacheco, vice president of marketplace intelligence at Havas Media. “Shoppers are restricting budgets in terms of gift giving, travel, dining, and experiences, so the brands that will resonate are those that transparently communicate in an impactful, value-oriented, and meaningful way.”

The Havas report, which relies on surveys of more than 5,000 consumers, found that most shoppers are attempting to trade down this holiday season, especially when it comes to spending on groceries, dining out, and travel.

Across all activities, Havas researchers found a four-point decrease in intent, which suggests that overall spending intentions are below previous-year levels. Intentions for air travel are down seven points, but intentions for car travel are up five points. Consumers also show increases in intent to buy gifts and attend parties and social gatherings this year.

Pacheco says these insights provide important contextualization as the 2022 holiday shopping season comes to a close and as the economic environment continues to evolve heading into 2023. Although budgets are tight this holiday season, consumers are still willing to splurge on something nice for others. They are also willing to extend their budgets for nicer groceries for their festivities and gatherings this holiday season. More than one-quarter of consumers said they’re willing to pay “a little more” for specialty items, and 15% will pay “a lot more” for the best brands and items.

Although lower-income consumers are cutting back across the board, they’re still spending on parties, gifts, and car travel. Lower-income consumers also remain willing to trade up to premium products when they are purchasing gifts for others, even if they stick to lower-end items when buying for themselves.

“Personally, I was surprised and charmed to see that gifting is the area where consumers would most like to splurge – much more so than they would for items for themselves. Even tipping generously when dining out is prioritized over premium restaurants, cocktails, and entertainment,” Pacheco says. “Everyone is feeling the pinch of inflation, but the spirit of holiday giving and kindness hasn’t been extinguished by financial pressures.”

As 2022 rapidly comes to a close, retailers are looking at this year’s holiday sales as a predictor of what’s to come in 2023. While a strong holiday season still remains likely, increasing pressure on low-income consumers will almost certainly stick around in the new year. 

“Post-Covid, expectations around holiday expenses shifted from personal and home items to socializing and travel, along with gifting. Discretionary spending has been deprioritized, and consumers are making sacrifices in favor of what truly matters to them,” Pacheco says. “This aligns to findings from our Resilience study, which showed that the vast majority of shoppers are concerned about inflationary impact on holiday shopping and committed to finding sales and discounts. Consumers are hyper focused on cutting costs anywhere and everywhere possible this season.”

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.