People are prioritizing travel over material goods when deciding where to put their vacation funds, according to a new Grid/Harris survey — likely in large part, experts say, because of eased Covid restrictions.
“We’re seeing a lot of consumers who really want to celebrate activities and really be around their family and friends for the holiday,” said Shelly E. Cohan, associate professor in the Fashion Institute’s Jay and Patti Baker School of Business and Technology.
A third of those surveyed said they planned to spend more on travel this year compared to last year – and only 10 percent said they would spend less.
Auto group AAA also said holiday travel this year would grow 1.5 percent from last year, putting it at 98 percent of pre-pandemic volumes. That means the travel volume will be the third highest after 2005 and 2019 since the association began tracking Thanksgiving travel in 2000.
“This is really the first holiday where everything seems almost normal,” Cohan said.
But while travel is clearly a priority for many Americans, that doesn’t mean consumers are alarmed by high travel prices this year. Flight, for example, comes at a higher price than usual – in part because the number of flights has not yet caught up with consumer demand. If driving is part of your vacation plan, the good news is that gas prices are falling — but more slowly than many would like.
Just over half of U.S. adults say these travel-related booking prices, from airline tickets to hotel prices, are impacting their plans for the holiday season.
So where are users falling?
Consumers who spend more on travel may spend less on material goods — such as clothing, toys or seasonal decor — that they might normally buy for friends and family members for the holidays. Instead, they may choose to go on a trip with a family member, Cohan said.
The survey found that 78 percent of US adults say the price of consumer products will affect their usual winter vacation plans.
“They’re not 100 percent retiring, but they’re a little more surgical about how they spend money,” she added.
This trend is evident in the survey data. When it comes to material goods, consumers are more likely to say they plan to cut back rather than spend more this season. Only 12 percent of those surveyed said they planned to spend more on decorating the halls this year compared to last year, and 28 percent said they planned to spend less.
Users hope to score deals
For the tangible items they buy, it’s all a matter of “judgment of value” — when the consumer decides whether a product is worth the money.
Many retailers capitalize on this sentiment in several ways:
First, they increase Black Friday sales earlier in the year to encourage consumers to spend their money early in the season, Cohan said. Last year, sales started in mid-October. This year: early October.
Second, during the October sales, some major retailers, such as Target, offered consumers price matching. This effectively means that if a consumer buys a product in October that goes on sale in December, the store will adjust the price of the purchased product. Consumers are more likely to buy a product sooner if they know they won’t get a better price later, Cohan said.
These strategies are working—October retail sales rose 7.5 percent from last year, outpacing the consumer price index. And while 54 percent of Americans (a figure that’s about the same as last year) agree that winter sales are the best time to shop, about 27 percent of those surveyed also say they plan to spend more on holiday sales this year compared to with last year.
What does this mean for the rest of the holiday shopping season?
“If the pace of sales isn’t to the point where retailers are moving inventory quickly enough, we’ll see that heavy discount heading into December,” Cohan said. “And that becomes more and more clear the closer we get to the holidays.”
Back to physical shopping
Another interesting trend related to the desire to “return to normal” for human connectedness is how many people are shopping with the money they have set aside for material goods: they are going back to the stores. Kohan said this likely has to do with people wanting to get into the holiday shopping spirit, pre-pandemic style.
“A lot of shoppers are really interested in the socializing aspect of shopping this year,” Cohan said. As a result, we can expect more hybrid shopping, with sales split between online and physical stores, than we saw last year.
Thanks to Lillian Barkley for editing this article.