### Holiday Shopping Trends: Shoppers Eye Deals Amid Uncertainty

As the holiday season approaches, consumers' purchasing behaviors are expected to be shaped by a mix of deal-hunting, unpredictable weather, and the distraction of an upcoming election. The National Retail Federation (NRF) forecasts a modest rise in holiday spending for November and December, projecting an increase of 2.5% to 3.5% from 2023, with total expenditures ranging between $979.5 billion and $989 billion. This growth rate marks a slower pace compared to the 3.9% spike seen from 2022 to 2023, when spending totaled $955.6 billion.

The annual survey conducted by Deloitte highlights shifting priorities among shoppers. While spending on decorations and experiences is expected to increase, expenditure on gifts is forecasted to decrease slightly compared to the previous year. The survey, which involved approximately 4,000 consumers and was carried out between late August and early September, reveals that shoppers are anticipating higher prices and showing greater willingness to spend, particularly among higher-income households earning between $100,000 and $199,000 annually.

Several factors, including low unemployment, a return to typical inflation levels, and a recent interest rate cut by the Federal Reserve, are contributing to a more positive consumer sentiment. Stephen Rogers, managing director of Deloitte's Consumer Industry Center, notes that despite political uncertainties, consumers are generally feeling better about their financial situations.

Deal-seeking behavior is set to continue strongly this season, as nearly 80% of shoppers surveyed by Deloitte indicated plans to take advantage of deals events in October and November, a significant increase from 61% last year. NRF CEO Matt Shay predicts a more promotional holiday environment, with widespread deals across various brands and categories.

Retailers might face challenges as consumers appear to prioritize decorations and experiences over gifts. According to Deloitte’s survey, spending on experiences is expected to rise by 16% year over year, while gift spending is projected to drop by 3%. Spending on non-gift items, such as decor and party apparel, is also anticipated to grow by 9%.

Retail categories may see relatively flat spending at around $1,043 per shopper in 2024, compared to $1,020 in 2023. Consumers across all income groups report value-seeking habits, such as reducing self-gifting, opting for affordable retailers, and seeking out private labels.

Retailers like Home Depot are preparing for the season by adjusting their product offerings. With higher demand anticipated for decor, Home Depot has increased its stock of low-priced artificial Christmas trees. However, in areas affected by recent hurricanes, the retailer is focusing on essential recovery items like shingles and drywall and offering a limited selection of holiday products.

The upcoming presidential election, scheduled for November 5, is another variable that could impact holiday shopping. Retailers and consumer brands such as Walmart and SharkNinja are monitoring the situation closely, with some like Amazon suggesting that election distractions could dampen demand for online shopping.

Weather is another critical factor that can influence consumer behavior. Evan Gold, executive vice president for Planalytics, points out that colder temperatures in November and December, compared to last year, are likely to boost holiday-related purchases. However, the impact of recent hurricanes may shift consumer spending priorities in affected regions.

This holiday season also presents a tighter shopping window, with five fewer days between Thanksgiving and Christmas compared to last year. Retailers will need to capitalize on each day and provide expedited shipping and convenient pickup options to meet the heightened demand and time constraints of consumers.

In summary, while various uncertainties loom, the overall sentiment among consumers appears positive, driven by economic confidence and a strong deal-hunting instinct. Retailers will need to navigate these dynamics carefully to make the most of this holiday shopping season.