Shoppers crowded Broadway Plaza in Walnut Creek, Calif., on Monday, Dec. 16, 2024. The holiday season was just about to hit its peak! Colorful decorations hung from buildings and light poles, bringing the bustling downtown to life with an energetic spirit. Despite the upbeat, festive music that played throughout the Pavilion, there was a clear anxiety among consumers.
Amid growing concerns over affordability and the rising cost of living, many households face financial challenges that have escalated to crisis levels. With inflation still smashing wallets and everyday living costs, sticker-shocked shoppers are resetting their budgets this holiday season. Many consumers express a greater willingness to spend this holiday season than they did one year ago. Some are preemptively deciding to withdraw deeply.
Over and over, shoppers at Broadway Plaza, the new outdoor mall across the Bay, told me they wanted to make this a special holiday for their families. Many felt pressure to spend more on gifts this year. Or they could be using this tactic to compensate for the challenges experienced during the course of the year. They pointed to the value of upholding cultural traditions and gathering with family and friends in the face of economic challenges.
Far more shoppers are adopting a wait-and-see attitude. These folks are understandably overwhelmed with increased costs on necessities from eggs to rent. In response, they’re refocusing their spending and reducing spending on holidays. Among these, many are looking to cheaper solutions or experiences over stuff or experiences that have material results over typical gifts. This combination of higher income and less overall spending on discretionary holiday gifts is part of a macroeconomic theme permanent across every demographic.
Retail analysts have warned that this year’s shopping pattern could be the result of a divided consumer mood fueled by economic uncertainty. As consumers and retailers alike continue to find balance between these two competing approaches, the future of retail remains an exciting but uncertain world to traverse. Many retailers have already begun implementing markdowns and other sales promotions to lure price-sensitive shoppers. While doing that, though, they are making premium high-end products for those who want to spend more.