Planned holiday spending unchanged from a year ago, most anticipate higher prices
Inflation may have slowed since this time last year, but that doesn't necessarily mean Virginians will ramp up their spending this holiday season. In fact, more than one-third of Virginians say they plan to reduce their holiday spending in the face of lingering high prices.
Almost two-thirds of Virginians plan to spend at least as much this holiday season as last year, and the average anticipated expenditure is essentially unchanged ($900.) The rate of price growth (inflation) is much slower than a year ago, but the high price level is putting the reins on spending. More than 70% of Virginians expect higher prices this holiday shopping season. Changes in the distribution of planned spending relative to a year ago vary across household income levels. Seventy percent of households earning more than $100,000 a year will spend at least as much as they did in the 2022 holiday season. Planned spending is lower this year within households earning less than $100,000 per year. Thirty percent of upper-income households plan to reduce holiday spending compared to 38%-39% of middle- and lower-income households.
Given that most Virginians will spend at least as much as last year, how much will they spend? More than 68% of Virginians will spend up to $500 during the 2023 holiday shopping season on gifts for others, up five percentage points from the 2022 season. Just under half of respondents plan to spend between $500 and $1,000, down more than six points relative to last year, although there are modest gains in those planning to spend $1,000 or more.
Spending over the holiday season falls into three categories: gifts, experiences (including entertainment at home and socializing away from home) and non-gift purchases (including holiday decorations and home furnishings). On average, Virginians plan to spend $501 on gifts for others, $211 on experiences and $188 on non-gift purchases, for a total of $900, down $6 from 2022.
Changes in relative prices contribute to the shift in types of purchases. For example, the prices of televisions, smartphones, smart home assistants, toys/games and sports equipment are down 9.4%, 12.0%, 5.7%, 3.9% and 2.5% year over year, respectively. In contrast, tickets to sporting events, music subscriptions, apparel and jewelry rose over the same period by 25.1%, 5.4%, 2.6% and 3.7%, respectively. Even goods with increased prices, if less than the overall inflation rate (3.3%), may seem like deals. Wrapping those gifts will also cost more, with the price of gift wrap increasing by 5.8% over the year.
Upper-income households plan to spend more than those earning less. Households earning more than $100,000 anticipate spending almost $1,400 this season, with $793 for gifts for others and $337 for experiences. This compares to their planned spending of $1,700 last year; the $300 reduction in year-over-year planned spending is mainly on experiences rather than gifts and other holiday expenditures. Comparatively, households earning less than $50,000 plan to spend $276 on gifts for others, $93 on experiences and an additional $131 on non-gift purchases. Like the higher-income groups, the change in the distribution for lower-income groups from last year is away from experiences and towards gifts and non-gift purchases.
More than one-quarter of households say they plan to start shopping earlier this year than a year ago, while more than half plan to start around the same time as last year. In 2022, more than a third started shopping earlier than the previous year. This indicates that over the last few years, consumers have spread their spending over a more extended period in the face of higher prices. Respondents this year plan to do about 58% of their shopping online, down significantly from 2021 (70%) but up from last year.
The annual Holiday Spending Report is conducted by the Institute for Policy and Opinion Research at Roanoke College as a public service.
"Planned holiday spending appears on pace with the 2022 season, with less than 20% of Virginians planning on spending more than they did last year,” said Dr. Alice Louise Kassens, John S. Shannon Professor of Economics and Senior Analyst at the Roanoke College Institute for Policy and Opinion Research. The average Virginian plans to spend about $900 between gifts for others, experiences and other non-gift purchases, essentially unchanged from a year ago. Overall price growth is down considerably over the last year, but price levels are historically high, with wage growth only recently outpacing price growth, giving consumers increased purchasing power. More than 70% believe prices will be higher this holiday shopping season than last year. Of those Virginians who plan to spend less, more than 80% cite prices or personal finances as the reason. The distribution of planned spending amount has changed since last year, with more Virginians planning to spend on the lower end (no more than $500) or upper end (more than $1,000) than in the middle range (between $500 and $1,000). Additionally, the distribution of planned purchase categories has changed, with more going toward gifts for others and less on experiences like concerts and socializing away from home. This redistribution is likely due to shifting relative prices. Focusing on consumer preferences for lower price-point gifts or offering deep discounts may be advantageous for businesses in this holiday season.”
Interviewing for The Roanoke College Poll was conducted by The Institute for Policy and Opinion Research at Roanoke College in Salem, Virginia, between Nov, 12 and Nov. 20, 2023. A total of 740 completed interviews came from random telephone calls to 450 Virginians, and 290 responses were drawn from a proprietary online panel of Virginians. Telephone interviews were conducted in English. Cell phones constituted 61% of the completed phone interviews. Marketing Systems Group provided the telephone dialing frame, and Lucid, LLC facilitated the online panel.
Questions answered by the sample of 740 respondents are subject to a sampling error of plus or minus approximately 4.0% at the 95% confidence level. This means that in 95 out of 100 samples like the one used here, the results should be at most 4.0 percentage points above or below the figure obtained by interviewing all Virginians with a home telephone or a cell phone. Where the results of subgroups are reported, the sampling error is higher.
Quotas were used to ensure that different regions of the commonwealth were proportionately represented. The data were statistically weighted for gender, race and age. Weighting was done to match Virginia data in the 2021 one-year American Community Survey (ACS). The margin of error was not adjusted for design effects due to weighting.
A copy of the questions and all toplines may be found here.
More information about the Roanoke College Poll may be obtained by contacting Dr. Alice Kassens at email@example.com or 540-375-2428 or the Roanoke College Public Relations Office at 540-375-2282 or firstname.lastname@example.org. roanoke.edu/IPOR