Consumers expected to spend $5 billion less during Thanksgiving weekend

A survey from the International Council of Shopping Centers (ICSC) predicts total spending will be $5 billion less than a year ago over the five days from Thanksgiving Day through Cyber Monday.

The survey indicates consumers plan to spend about $125 billion during the period compared to projections in 2023 of $129.5 billion. Consumers between the ages of 28 and 59 plan to spend the most. Millennials (ages 28-43) plan to spend $628 during the period, while Generation X (ages 43-59) expect to spend $629. Older Boomer consumers (ages 60-78) plan to spend an average of $444, according to survey results.

While 88% of respondents said they plan to visit some stores over the five days, 66% said their primary reason for shopping during this period is to find deals and discounts and to stock up on necessary items unrelated to holiday shopping. However, 84% said they plan to spend some on holiday gifts for others while 76% said they will spend on dining out and other holiday items. About half said they will spend on entertainment and personal services in the upcoming holiday shopping period.

“While the holiday shopping season and promotions continue to start earlier each year, traditional milestones like Thanksgiving weekend remain solid shopping periods for retailers, and we expect this year to be no different,” Tom McGee, president and CEO of ICSC, said. “Two-thirds of consumers plan to do all or most of their holiday shopping during those five days, and four in five plan to shop on Black Friday and Cyber Monday, highlighting the opportunity for brands to create memorable holiday moments.”

Overall, the estimates from marketing firms and trade groups indicate holiday sales will slow this year to more normalized ranges of 2.5% to 3.5% growth. Retailers from Amazon to Walmart began offering sales in October which likely pulled some spending forward. Walmart execs said this week that sales have been strong over the past few months and the holiday is off to a good start.

Target reported dismal results indicating its customer base is not shopping for higher-margin apparel and home goods. Off-price retailers are doingwell and positioned to be winners this holiday season, according to Simeon Gutman, an analyst with J.P. Morgan. Gutman said Walmart and Costco can compete on value and will likely take share this holiday season.

ICSC reported last month that 63% of consumers plan to shop at discount stores for the holiday season, while only one-third plan to shop at a department store.

Economists at the Federal Reserve Bank of New York have said rising consumer debt can directly impact future spending. A new study conducted by Qualtrics on behalf of Credit Karma found 49% of consumers feel stressed about affording the holidays. Also, 61% said inflation and higher costs have impacted their holiday spending budgets.

Nearly half of respondents said they feel the most stressed about their finances during the holiday season, with many of them heading into the holidays in debt. Four in 10 consumers have existing debt, and 33% are carrying more than $5,000 in debt.

But consumers are continuing to add to their debt with nearly half are planning to charge some of their holiday gifts for others. The survey also found that 61% said they would charge groceries for holiday meals. Respondents were asked how they plan to fund their holiday budgets this year. Nearly half  (49%) plan to use cash, 42% will charge their credit cards, 26% will pull from savings, and 26% will use credit card rewards. The survey found that 30% of younger consumers under age 29 plan to open a new credit card to help with holiday spending.

“Time and time again, the holidays are a polarizing time of the year for people, bringing forth a range of emotions from excitement and community to anxiety and loneliness,” said Courtney Alev, consumer financial advocate at Intuit Credit Karma. “Our study found that more than a third of Americans (37%) say the cost of the holidays negatively impacts their mental health.”

Around 27% said social media drives them to overspend during the holidays and 40% said holiday sales encourage them to spend money on things they they don’t need. Much of that excess spending is for themselves, the survey found.