Insights

Home & Retail Intelligence ReportNovember 2024 This holiday season, it seems Santa has delivered a financial paradox. As consumers prepare to be inundated with Black Friday, Cyber Monday and Green Tuesday sales and promotions, economic indicators are sending analysts conflicting signals. Inflation is down from last holiday season, but consumer prices remain stubbornly high. It begs the question: what are consumers ready to spend on themselves and their loved ones this holiday?According to recent JD Power data, bank customers in the United States are ready to open the purse strings to make the holidays merry and bright. Overall, 59% of customers say they are prepared to spend the same or more this holiday season than they did a year ago.Still, that jolly news isn’t without its caveats. Most notably, customers are leaning on credit, such as cards, loans or Buy Now Pay Later plans, as much as they did last year. That reflects customers’ precarious overall financial health,1 which is largely unchanged since 2023. Only33% of customers are considered financially healthy compared to 30% a year ago.Holiday Spending Trends UpNearly 1 in 5 (19%) customers say they plan to spend more this holiday season than they did a year ago. That is up from 17% in 2023 and 13% in 2022. That number is highest among customers that are financially healthy and customers under the age of 40.Customers’ willingness to spend may reflect enhanced financial preparedness. Overall, 31% of customers say that they budget for holiday spending with specific holiday savings, up from 27% a year ago. Another 41% say that they budget for general purchases. Only 28% say they do not budget, down from 31% a year ago. The rate of those who say they do not budget at all is highest among vulnerable customers, stressed customers and those 40 years old and older. Customer Still Lean on CreditWhile customers may rely on savings to help pay for holiday gifts, credit will play a major role in decking the halls. When asked how their use of credit has changed compared with a year ago, 19% say they are using more credit cards, loans or Buy Now Pay Later options. That rate is unchanged from each of the previous two shopping seasons, when inflation was far worse. In fact, the rate has remained relatively unchanged for all metrics (about the same credit usage, using less credit and unsure).When asked if they plan to make a major purchase for their home (e.g., an appliance, furniture, etc.), customers are expressing a more conservative approach. Only 21% say they plan to make a major purchase during the holiday season, with the highest rate among those that have healthy finances and are under the age of 40.Among customers that do plan to make these purchases, 40% say they are influenced by seasonal sales and discounts. That’s not surprising, as 76% of all customers say price is the biggest influence in their purchasing decision, with sales and promotions being the next largest driver (50%).Interestingly, customers intend to shop across a variety of channels without one option dominating. In fact, just as many customers say they prefer in-store shopping to online shopping (47% for in-store vs. 48% for online). That is largely driven by customers’ interest in ease of returns and exchanges, extended store hours, in-store and drive-up pickup options. Holiday HelpersAs analysts examine the data, a concerning trend emerges: many customers will be spending as if their finances have fully recovered, even if their overall financial health is unsteady. This potentially risky behavior could lead consumers to surpass their budgetary limits and rely on already strained lines of credit, placing them in a vulnerable financial position.For retailers, this spending trend could present a seasonal sales boost, but they should brace for the potential post-holiday spending slowdown once customers start getting the bills.Find out MoreThis Home & Retail Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in October 2024. It was authored by Andrea Lau, home and retail practice lead at JD Power. Please contact us at the numbers below to connect with Ms. Lau or to learn more about the underlying research.Media ContactsBrian Jaklitsch; East Coast; 631-584-2200; [email protected] Effler, JD Power; West Coast; 714-621-6224; [email protected] 1JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

Inflation may turn all of us into followers of Bob Villa, the famous home improvement do-it-yourselfer. The persistent high cost of goods has everyone thinking about how they can tighten their belts. It turns out that for some, according to the latest JD Power data, that might mean adjusting their tool belts, as they get set to paint their walls or install their cabinets to save some cash.