As retailers accelerate their holiday preparations earlier each year, a recent report from Wells Fargo offers a restrained outlook on the 2024 holiday shopping season. Following years of robust consumer spending that kept the U.S. economy on an upward track, the report forecasts a modest 3.3 percent increase in holiday sales over the same November-December period last year, a rate below the long-term holiday average growth of 4.3 percent. This tempered forecast highlights the changing landscape of consumer spending, with households adjusting to new economic conditions and seeking out early deals in a competitive retail environment.
The Shift to Early Holiday Spending
With Halloween barely over, holiday shopping displays have already crowded store aisles, drawing shoppers to start their holiday purchases well before Black Friday. This early spending trend reflects a change in consumer behavior as many shoppers aim to spread out their purchases to ease the impact on monthly budgets. According to Wells Fargo’s report, a combination of economic challenges—including inflationary pressures, increased debt burdens, and limited discretionary income—has contributed to this shift, prompting consumers to seek early-season deals. Brick-and-mortar stores, home improvement retailers, and online giants like Amazon have all responded by rolling out sales sooner than ever, hoping to secure early purchases.
Yet, the traditional shopping period from Black Friday through Christmas remains important, if somewhat diminished in its dominance. A shorter holiday calendar this year, with Thanksgiving falling later in November, means that retailers have just three and a half weeks for concentrated holiday sales. To capture consumer attention, both in-store and online retailers are doubling down on time-sensitive deals, with Amazon and other online platforms replicating events like Prime Day in October. The advantage of such early promotions is significant, as Wells Fargo notes that nearly 30 percent of every holiday dollar is now spent online—a trend that has strengthened since 2019.
Household Debt and Disposable Income Constraints
The post-pandemic economy has reshaped household spending power. The report points out that disposable income growth remains moderate and supportive of steady spending; however, many consumers face significant debt, with revolving credit balances now 30 percent higher than two years ago. As a result, fewer households can rely on credit to fund a holiday splurge, and paycheck-to-paycheck shopping has become a reality for more consumers. The cost of essential services like healthcare and rising interest rates on consumer loans has further squeezed household budgets, impacting spending on gifts.
In turn, these pressures have shifted consumer interest from traditional retail purchases toward experience-based gifts, such as dining out, concerts, and other entertainment options. The report notes that experience gifting, often unaccounted for in traditional holiday sales metrics, is growing in popularity as it provides a way for consumers to balance the spirit of giving with financial constraints.
A Competitive Retail Landscape: Online Dominance Meets Brick-and-Mortar Flexibility
Both traditional and online retailers are racing to capture consumers’ holiday dollars in a challenging landscape. While brick-and-mortar stores attract early and late shoppers with eye-catching holiday displays and stocked inventory, online platforms, bolstered by extensive logistics and fulfillment capabilities, are competing by offering delivery right up to Christmas Eve. This year, home improvement retailers have emerged as unexpected holiday spending hubs, capturing a growing share of holiday sales dollars over the past decade. By creating festive displays and offering holiday-specific deals, they’ve retained a competitive edge, demonstrating that physical stores can still hold strong appeal amid the ecommerce boom.
For their part, online retailers are optimizing user experiences and refining delivery logistics. Many platforms, Amazon included, have doubled down on “season pushing,” advancing holiday shopping to earlier months with events like October’s Prime Day. Such strategies help ecommerce platforms capture early shoppers while providing convenient access to in-demand items, helping online retail maintain its dominance as the preferred shopping mode for holiday buyers.
The Broader Economic Implications and a Look Ahead to 2025
Despite expectations for a soft close to 2024, Wells Fargo’s report maintains that the outlook for 2025 remains stable. Households appear more financially stretched than in recent years, yet consumers have adapted by spreading out their spending over the calendar year, reducing the need for a holiday-driven splurge. Retailers, likewise, have adjusted to this new rhythm, with flexible pricing strategies, early promotions, and omnichannel shopping experiences that support steady year-round sales. While 2024 may bring a “Scary Christmas” in terms of constrained holiday budgets, the broader picture suggests a manageable transition into a “Happy New Year” with spending patterns aligned to new economic realities.
Overall, Wells Fargo’s holiday forecast captures the ongoing adjustments in consumer habits and spending power. As retailers leverage innovative strategies to attract early and cost-conscious shoppers, the 2024 holiday season will likely reflect the “new normal” of a post-pandemic economy. For consumers and retailers alike, these changes underscore the need to adapt and thrive within an evolving market, setting the stage for steady, if modest, growth in the coming year.
