Researchers say consumer confidence will lead to more sales for the holidays.
- American shoppers will likely spend more this holiday season than was forecast earlier this year.
- Even though consumer confidence isn't as high now as it was during the same time last year, researchers said it's still higher than was predicted in August and mid-September.
- According to researchers, 70% of Americans said they plan to spend at least $100 during the major shopping weekend.
As the holidays draw closer, new consumer confidence figures from Morning Consult suggest that American shoppers will be more liberal in their spending habits this year. The new findings come a little over a month after the National Retail Federation announced that it expected holiday retail sales to increase "between 3.8% and 4.2%" over the previous year.
Based on over 7,500 interviews with American adults, researchers said the new data shows that the increase in consumer confidence largely stems from a resilient labor market, higher corporate earnings, and "overblown" tariffs between the United States and China.
"Consumer fundamentals like job gains, disposable income and stock market wealth are all stronger than we expected back in October," said John Leer, Morning Consult's senior director of economic intelligence. "This improvement in underlying fundamentals has translated into increases in consumer confidence."
Some of the confidence, researchers said, originates from the October Jobs Report, which showed that the unemployment rate remains below 4% while the country added 128,000 new jobs. The report also included revisions to previous job numbers from August and September, adjusting those figures upward from their initial amounts. Researchers said things look even better in the wake of the agreement between General Motors and the United Automobile Workers.
Where and how consumers are expected to spend
Black Friday informally marks the start of the holiday shopping season, and if Morning Consult’s data is correct, shoppers will make a big spending push this year.
According to a poll of 2,200 U.S. adults conducted Oct. 24-27, approximately 70% of respondents plan to spend at least $100 over Black Friday weekend. That amount is relatively flat from last year's amount.
Researchers also learned – unsurprisingly – that Americans will be more likely to spend their money online, with 34% saying they tend to shop online specifically for the holidays. Outside of the year-end rush, however, respondents told researchers that they would rather shop in-store (44%). They'll most likely do their in-store spending at Walmart (77%) and their online shopping at Amazon (74%). Among respondents, 77% of millennials said they were likely to go to shopping centers to find gifts.
Editor's note: Looking for the right e-commerce website design service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
Researchers found that 73% of respondents said they were going to purchase clothing as gifts for their loved ones. Gift cards (69%), food (60%), books (48%) and video games (41%) rounded out the top five most anticipated gift purchases. [Read related article: The Best Days for Holiday Sales: A Guide for Businesses]
Making bigger purchases
While Black Friday will continue to be a major shopping day this year, researchers said Cyber Monday will be "a bigger draw." When comparing the two days, researchers found that 52% of respondents said they would likely shop on Cyber Monday, while 45% said the same for Black Friday.
For the uninitiated, Cyber Monday is another major shopping holiday that predominantly deals with major electronics, though retailers have capitalized on the date as a second Black Friday of sorts.
According to researchers, consumers are looking to make major household purchases this holiday season. Big-ticket items like furniture, televisions and major appliances, while not as popular with consumers as they were last year, are more likely to get snatched up than August forecasts suggested. The rebound in consumer confidence for such large purchases is particularly likely for those making $150,000 or more per year, since they make up a majority of large household purchases.
Big spending and frugal year endings
Regardless of what they spend their money on this year, researchers found more consumers willing to "spend without a budget" over this holiday season than there were last year. The finding marked a 3% increase from 40% in 2018 to 43% in 2019.
Among the majority of consumers who say they have a budget, just under half (49%) said they plan to spend about the same amount, while 29% said they expected to spend less and 14% said they planned to spend more.
Not everyone will be looking to the holiday season to spend. According to researchers, those who said they plan to spend less this year cited numerous reasons for it. The most common reason for curtailing holiday spending was that they were simply trying to save up (49%), though 38% said they were trying to pay down debt and 33% said actual necessities cost more this year.