Apparel and accessories to suffer as holiday spending drops 18%
According to a new report from KPMG, U.S consumers are planning to spend less this holiday season, with the apparel and accessories segment expected to be hit particularly hard by reduced shopping budgets.
KPMG surveyed 1,000 U.S. consumers in September of this year and found that, on average, they had reduced their holiday shopping budgets by 18% due to the financial pressures of the Covid-19 pandemic. Average holiday spending per consumer is therefore expected to decrease from $627 in 2019 to $515 in 2020.
Chief among the categories where shoppers are intending to spend less this year is apparel and accessories, where consumers expect to spend 27% less. Spending on electronics and gift cards is also expected to fall sharply, with the categories seeing decreases of 16% and 14%, respectively.
All product categories are expected to be purchased significantly more through e-commerce platforms than in previous years, with online spending on apparel and accessories predicted to see a 25% increase compared to last year.
“In-store retailers hoping for a holiday reprieve may be disappointed. The migration to online continues across nearly all retail segments,” commented KPMG’s national advisory leader for consumer and retail, Scott Rankin, in a release.
The reasons for the overall decrease in holiday spending are clear. Around a third of those surveyed said that their employment status had been impacted by Covid-19, with 36% of consumers saying that their income had been negatively affected, reducing on average 34%.
Unsurprisingly, 19% of those surveyed said that, as a result of the health crisis, they had become more mindful of their spending habits.
“Faced with considerable uncertainty and reduced household income, consumers are spending less this holiday season, focusing on essential purchases for the home and gifts for close family members,” explained Rankin.
“Retail customers are forming new shopping habits, which are expected to continue into 2021 and beyond,” he added, indicating that the effects of the Covid-19 pandemic will be felt in the retail sector for quite some to come.
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