US holiday spending set for steepest drop since pandemic: PwC Survey

Eight-four per cent expect to cut back over the next six months, citing rising prices, new tariffs and higher cost of living; 36 per cent expect to cut back on clothing purchases.

While discounts matter this holiday season, US shoppers aren’t just searching for deals. They’re looking for a sense of normalcy, value and brands that ‘get’ them.

During the holiday season, specifically, 53 per cent say that general price increases will likely affect their spending decisions this year.

Gen Z respondents (age 17 to 28) said they expect to reduce their holiday budgets by 23 per cent, more than any other generation. That means retailers could be fighting harder for a smaller pool of Gen Z’s discretionary dollars this season.

By contrast, millennials, Gen X and baby boomers expect to maintain or even increase their holiday spending, according to the survey that covered 4,000 consumers in the country between June 26 and July 9 this year.

Consumers are approaching holiday purchases more deliberately, deciding what matters most, where to scale back and what feels worth the splurge. Brands that recognise these nuances, and meet shoppers where they are, have an opportunity to build loyalty that lasts beyond December, the survey concluded.

Ninety per cent of tariff-concerned shoppers say they are cutting back overall, versus 75 per cent of everyone else.

Interestingly, Gen Z plans to balance budget concerns with a focus on sustainability and wellness when choosing what to buy this year. According to the survey, 63 per cent are opting for resale and upcycled products, and one in three say they are cutting consumption to reduce environmental impact.

In addition, 34 per cent of Gen Z (versus 27 per cent overall) say sustainability or health and wellness are top factors they consider when making holiday purchases, and more members of this generation reads labels before purchasing food than other segments (29 per cent versus 24 per cent overall).

Traditional drivers like price (49 per cent), free shipping (42 per cent) and promotions (38 per cent) still influence their purchasing decisions as well.

Payment choices are changing as well, a PwC release said citing the survey results. Credit card use has climbed sharply, with 52 per cent saying it is among their top three payment methods (up from 40 per cent last year).

Cash has surged to 48 per cent, potentially to avoid fees or stick to budgets (up from 41 per cent in 2024.) Gift cards and prepaid cards are also gaining traction, with 27 per cent of shoppers saying these cards are a preferred payment method, up by 14 per cent from last year.

Fulfilment choices are diversifying too. While 70 per cent of all shoppers prefer home delivery, 39 per cent say they will buy online and pick up in store. Same-day delivery is most popular among Gen Z and millennials, with about 30 per cent of each group saying that’s their preferred option for receiving items when shopping online.

ALCHEMPro News Desk (DS)