Holiday spending pushing consumers into credit card debt, with Buy Now Pay Later options serving as an attractive but potentially risky solution
In the lead-up to the 2021 holiday season, U.S. retailers have been treading carefully when it comes to price increases. This cautious approach is a response to rising costs due to tariffs and the sensitivity of consumers, as well as the competitive landscape.
According to a recent survey, nearly half (47%) of respondents expect to spend most of their purchases this holiday season with Amazon. This is followed closely by nearly a third (32%) of respondents who plan to shop at big-box retailers like Walmart and Target. Interestingly, about eighteen percent of respondents plan to shop with small businesses this holiday season.
The survey also revealed that more than a third (37%) of Americans consider buying gifts more important than their credit card balance this holiday season. In response to these spending habits, some retailers have announced price increases. For instance, E.l.f. Cosmetics plans to increase its prices by $1 during the holiday season. However, other retailers like J.C. Penney and The Home Depot have chosen to hold their prices steady.
Walmart and Lululemon, on the other hand, have warned of higher prices to cope with tariffs during the holiday season. Despite these efforts, some price increases are occurring in categories directly affected by tariffs such as clothing, toys, and appliances. Retailers and analysts are closely watching consumer behavior to gauge the extent of cost pass-through to prices.
The survey also found that twenty-five percent of respondents plan to use buy now, pay later services for holiday spending. This trend is particularly popular among millennials and Gen Z, with about one in five from each demographic planning to use these services for holiday expenses.
In a statement, Petr Marek, co-founder and CEO at Invoice Home, noted that consumers are being strategic in their spending and affordability during the holiday season. To save costs, the majority (82%) of respondents to a recent Inmar Intelligence survey plan to reduce their spending on groceries and other necessities to cover their holiday expenses.
In an effort to help consumers with their holiday spending, sixteen percent of respondents plan to use ChatGPT or another AI tool. As the holiday season approaches, it will be interesting to see how these trends unfold and how retailers continue to adapt to the changing landscape.
- The recent survey suggests that personal-finance considerations are playing a significant role in consumers' shopping decisions, as more than a third of Americans consider buying gifts more important than their credit card balance this holiday season.
- Retailers like E.l.f. Cosmetics are responding to these spending habits with price increases, planning to boost prices by $1 during the holiday season.
- In the business arena, tariffs are forcing some retailers, such as Walmart and Lululemon, to warn of higher prices during the holiday season to cope with additional costs.
- To save costs and manage their personal-finance situation, the majority of respondents to a recent survey plan to reduce their spending on groceries and other necessities to cover their holiday expenses.
- Furthermore, the survey indicates that the retail industry is seeing a growing trend of using AI tools, like ChatGPT, to help consumers with holiday shopping and financial management strategies.
