Early Sales, Economic Stress, and ‘Doom Spending’: LSU’s Dan Rice on 2024 Holiday Shopping Trends

This holiday season is shaping up to be anything but typical.

With economic pressures, a shorter shopping window, and shifting consumer behaviors, both shoppers and retailers are facing a unique set of challenges.

According to recent data from the National Retail Federation, or NRF, and Deloitte, holiday spending is expected to increase despite inflation and lingering uncertainties. What’s driving this growth, and what new trends are emerging as consumers adjust to rising costs and a rapidly evolving retail environment?

LSU marketing associate professor and Director of the E. J. Ourso College of Business Behavioral Research Lab Dan Rice offers insights on what these shifts mean for the 2024 holiday season, examining how trends like online shopping, early-season sales, and “doom spending” could impact consumers and businesses alike. 

What do you expect to see this year for holiday shopping?

The signals from two major information sources, the National Retail Federation Holiday spending outlook and Deloitte’s holiday retail survey, are positive. The former is predicting about a 3% increase in planned spending compared to last year, and the latter predicts roughly an 8% increase. Of note, this is higher than the all-time high we saw back in 2019 before the pandemic.

Is there anything different this year than in years past? What shifts in consumer behavior during the holiday season have you noticed over the past few years? Are we likely to see any new trends emerge in 2024 based on this NRF data?

There are a few interesting trends that we’re seeing. The first is that interest in shopping online continues to grow: This year, 57% of shoppers plan online purchases compared to only 46% in department stores and grocery stores (the next closest categories). According to the Deloitte survey, 48% will now shop on a smartphone, which is also a growing trend.

Another interesting trend is one that is being called “doom spending.” Whereas a few years ago, as we were coming out of the pandemic, people were overspending on “revenge shopping or buying,” essentially making up for lost time during the pandemic when they couldn’t buy items, we’re now seeing “doom spending” as a way to cope with anxiety and stress, largely due to the consumers’ views of the state of the world currently. Credit Karma found in a recent survey 27% of Americans were doom spending, which was substantially higher for Gen Zers and millennials. These largely manifest in impulse buys to make you feel in control of something when you feel the world is out of control. Counterintuitively, it may worsen your situation if you outspend your budget too often.

Another trend that continues to grow is earlier-in-the-season sales like Amazon’s Prime Days in October online and increased appeals for shopping earlier and earlier in the season with holiday flyers coming in October for certain brick-and-mortar retailers. More and more people are starting to shop earlier to make sure they complete their shopping on time. According to Deloitte, this year, 78% were planning to participate in October and November promotional events, up a whopping 15% from 2023. This suggests that the trend of earlier sales is attracting customers and may have several benefits for retailers and shoppers alike.

How do you think this year’s economic environment will impact consumer spending?

It probably will boil down to an individual’s specific position and beliefs. Many indicators in the economy are positive: there’s low unemployment and inflation has dropped considerably. On the other hand, housing is expensive, and prices haven’t decreased in most cases; they’ve just stopped increasing as quickly. Believe it or not, we’re doing much better than many other major economies, and you can see that in consumer spending, which increased by 3.7% in the last quarter. Again, those prices, though, haven’t come down; prices are up roughly 20% since Biden took office but might go even higher as Janet Yellen suggests that tariffs could greatly increase inflation and businesses ready to raise prices. So, it will likely depend on your particular financial situation. For example, are you able to meet your needs and have some extra to spend, or are you struggling to get by? It will also perhaps depend on whether you think prices will drop or increase in the future.

How do you see the balance between online and in-store shopping evolving this year, and what strategies should retailers adopt to compete?

As I noted, the biggest intention to shop is in the online channel, but the next three channels of planned purchase are offline, according to the NRF. We’re getting to a point where, for most items, the line between channels is blurring. You can have people check things out in-store and buy online, buy online and pick up at the store, or shop exclusively online or offline. So, where did you make your decision? Sometimes that’s hard to tell. The key for retailers will really be to have the right offerings and accessibility for each of their customer segments. Giving them attractive offers and convenience at a time when they are receptive is the key. How that plays out is, again, rather context-dependent.

The shopping period between Thanksgiving and Christmas will be five days shorter this year, totaling 26 days. How might that impact shopping?

There will likely be several ways the shorter season, including one less weekend as well, will affect shopping from both the consumer and retailer sides. On the consumer side, we might find consumers who, due to a more limited period, tend to have increased shopping urgency, leading to more purchases in a short amount of time and more impulse purchases as they won’t have as much time to shop around or feel like they’ll miss the deal if they don’t buy now.

Additionally, due to the reduced time period, we might see an even more marked switch to online purchases to help economize shopping efforts and efficiencies.

For retailers, we may see many tactics aimed at attracting consumers: increased advertising and offers of free rush shipping, for example. We may also see earlier sales and deeper discounts to move products more quickly and end up with less dead stock after the season.

We may also see some stress on supply chains, though most of the supply shipments have already occurred. I think distribution issues from order shipping to the consumer are more likely.

Sustainability has become a larger concern for consumers. Do you expect this trend to affect holiday spending habits, particularly with a growing emphasis on eco-friendly and socially responsible brands?

Again, this likely depends on the specific consumer. The first concern for most consumers is whether the product will function or bring the intended benefits. A product that is 100% sustainable but doesn’t meet any other customer expectations is likely to be a non-starter for most people. That said, there is a growing trend among some consumers, as noted by the NRF, to shop in thrift and resale shops. Typically, that satisfies a need to save money, and at the same time, it allows one to be more sustainable with purchases. 

Perhaps somewhat counter to this trend, people are spending more on experiences with 16% growth YoY. This might, for example, cause people to fly to visit family, which is certainly less sustainable than some other similarly priced alternatives (e.g., sending a gift and having a Zoom call).

The NRF report mentions that technology will be crucial for retailers in creating seamless shopping experiences. How can businesses best leverage technology, like AI and data analytics, to enhance customer engagement and boost sales?

Retailers are looking to make the experience painless and smooth for the consumer by doing what we call “reducing the friction of the sale.” If you’re online, you might have easy checkout with PayPal, Google Wallet, or some other one-click purchase mechanism. This makes it easier to complete the transaction and thus reduces your mental and time costs in some ways. To the extent you use an automated system (or even credit card), relative to cash, the “pain of payment” is reduced even when paying objectively the same amount.

Considering the NRF's expectation of steady growth despite economic uncertainties, what key factors do you believe will influence whether consumers tighten their spending this holiday season?

Again, some of the major determinants will be individual differences. For example, does this consumer make $20,000/year or $200,000/year? The latter obviously can plan to spend quite a bit more and be comfortable. The other issue is the extent you believe the economy is good or bad, and that largely comes down to comparisons. Many indicators are good, including a near-miraculous soft landing on inflation, and we are better off on most measures than our G7 peers. However, prices are high, which might make you uneasy. Whether you see prices going up with a new administration or down may also influence your decisions, and in some impulse purchases or emotional purchases, most rational thoughts have little impact.

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