Holiday spending, especially by Gen Z, will drop, survey says

Holiday Shopping Trends: Gen Z Leads the Way in Frugal Spending

As the holiday season approaches, shoppers are expected to tighten their belts and trim their spending. According to a recent survey by consulting firm PwC, consumers across generations plan to spend an average of $1,552 on holiday gifts, travel, and entertainment, representing a 5% drop from last year’s average. This decline is largely driven by Generation Z, who intend to spend 23% less than they did last year, marking the biggest drop among all generations.

The survey, which included a representative sample of 4,000 U.S. consumers, reveals that Gen Z’s spending habits are heavily influenced by their focus on value and cost transparency. Having grown up in an era of rising costs, this generation is keenly aware of the importance of smart shopping. As Ali Furman, U.S. consumer markets industry leader for PwC, notes, “Price is Gen Z’s love language.” This means that they are more likely to prioritize experiences, such as concert tickets or travel, over material goods, and are always on the lookout for the best deals.

Challenges and Opportunities for Retailers

For retailers, Gen Z customers present both an opportunity and a challenge. As they enter adulthood, they tend to have smaller salaries, new expenses, and debt to pay down, making them more budget-conscious. Additionally, their experience-driven approach to spending means that they often prioritize entertainment and vacations over buying new items. This shift in spending habits requires retailers to adapt and find new ways to appeal to this demographic.

Furman highlights the difficulties retailers face in keeping up with Gen Z’s rapidly changing trends and preferences. As the fastest generation to adopt and abandon trends, they can be a challenging group to cater to. However, by understanding their values and priorities, retailers can develop effective strategies to win them over. This may involve offering more experiential products or services, providing transparent pricing, and creating a sense of community and connection with their brand.

Holiday Spending Expectations Across Generations

While Gen Z’s spending expectations have declined significantly, other generations have seen relatively flat or increased spending plans. Baby boomers, for example, intend to spend 5% more on average than they did last year. This variation in spending habits across generations underscores the complexity of the holiday shopping landscape and the need for retailers to tailor their approaches to different demographics.

The survey’s findings also suggest that consumers are becoming increasingly price-sensitive, driven in part by concerns about rising costs and potential price increases due to higher tariffs. As a result, shoppers are more likely to delay or shop early to secure the best deals, making it essential for retailers to be competitive and transparent in their pricing strategies.