Context:

Holiday spending is anticipated to decrease this year, with the most significant decline observed among Generation Z, who plan to reduce their expenditures by 23% from the previous year. This trend is largely driven by Gen Z's focus on value and cost transparency, as they navigate rising living expenses and prioritize experiences over material goods. Retailers face challenges in adapting to Gen Z's rapidly changing preferences and budget constraints. While baby boomers plan to spend slightly more, other generations' spending remains relatively stable. The broader backdrop includes consumer concerns over potential price increases due to tariffs, which influence shopping behaviors such as early purchases and heightened price sensitivity.

Dive Deeper:

• Holiday shoppers across generations expect to spend an average of $1,552 on gifts, travel, and entertainment, marking a 5% decrease from last year's planned spending. This reduction is most pronounced among Generation Z, who plan to cut back by 23%, a stark contrast to their 37% increase in spending expectations from the previous year.

• Generation Z's spending habits are influenced by their upbringing in a period of rising costs, making them highly value-focused and cost-conscious. They often view finding cheaper alternatives not as a compromise but as smart shopping, illustrating their preference for cost-effectiveness.

• Retailers find both opportunities and challenges in catering to Gen Z, who are aged 13 to 29. As this demographic enters adulthood, they juggle smaller salaries, new expenses, and debt, while showing a preference for experiences such as travel and entertainment over purchasing new items.

• The holiday spending landscape is further complicated by the potential for increased tariffs, which has made consumers more wary of price hikes. This anticipation has led to behaviors like early shopping and a greater focus on securing bargains and delaying non-essential purchases.

• While other generations show stable spending intentions, baby boomers plan to increase their holiday budget by 5%. The overall cautious spending is reflective of consumers' broader concerns about the cost of living, including rising utility bills and other expenses.

• Retailers need to adapt quickly to the fast-paced trend adoption and abandonment by Gen Z shoppers, who are known for rapidly changing preferences. This dynamic is crucial for businesses aiming to capture this demographic's spending during the holiday season.

• The survey conducted by PwC included a representative sample of 4,000 U.S. consumers and was carried out in late June and early July. The findings highlight the impact of economic factors such as tariffs on consumer sentiment and behavior, particularly the fear of prices going up, which drives more conscious and strategic purchasing decisions.