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Dive Brief:
U.S. consumers anticipate spending $847 on average this holiday season, a 4.6% bump from the previous year, according to a KPMG report released last week.
Eight in 10 consumers expect tariffs to drive an increase in prices, according to the report.
About four in 10 shoppers said they’re using AI to research purchases, and 22% plan to use it in the future. Younger shoppers are leading the way in using generative AI for shopping, with 56% of Gen Zers and 62% of millennials using the technology to research purchases, the report noted.
Dive Insight:
Though holiday shoppers expect to spend more this holiday season, they’re curtailing their spending in some areas over others. Consumers said they will spend 15% less on toys, 12% less on furniture and 9% less on hobby supplies, KPMG’s survey found.
While consumers may be reducing their spending in some categories, shoppers are also allocating a portion of their budget for personal splurges. Nearly six in 10 consumers said they will make purchases for themselves this holiday season. Their personal holiday spending budget is expected to rise 20% year over year to $379, KPMG said in its report.
“Consumers have given themselves permission to prioritize their own needs and the brands that pivot to capture small moments of joy without breaking the bank will see an opportunity to grow this holiday season,” Duleep Rodrigo, KPMG’s U.S. consumer and retail leader, said in a statement.
The report also offers some insight into what gifts consumers are seeking this year. Among the top gifts this holiday season are money (57%), gift cards (48%) and apparel (39%), the survey found.
Gen Zers are turning to AI for their shopping research as they tighten their spending. Gen Z shoppers intend to cut their spending on gifts by 30%, according to a recent PwC survey. The generation’s spending pullback could send total holiday sales down 5% year over year, per PwC.
It remains to be seen how many consumers will ultimately spend more this holiday season. A survey from Experian and GroundTruth found that less than a quarter of shoppers are spending more this holiday season, while 27% expect to cut their spending.