The holidays are the most wonderful — and the most stressful — time of year for many. While the season always comes with a number of stressors, this year brings a unique set of circumstances and challenges. All Americans face an uncertain economic climate and rising costs due to inflation. Budgets are top of mind as a result, and people are changing the way they shop at their favorite retailers.
Pay-over-time company Affirm recently conducted research exploring how people are approaching holiday shopping this year. The company found that people plan to be much more intentional with how they are spending both time and money. One in five Americans surveyed admitted to getting out of their holiday plans, while about two-thirds said they typically exceed their holiday shopping budget, with about half going over by up to $500. This year more than half of Americans plan to forgo giving gifts to their coworkers in favor of prioritizing those closest to them, like friends and family.
We spoke with Affirm’s Trends Expert, Ashmi Pancholi, who is an executive at the company, to learn more about this year’s most significant trends.
Gary Drenik: What is the top shopping trend Affirm is seeing this holiday season?
Ashmi Pancholi: The top trend we’re seeing is a shift toward more intentional gifting. Affirm’s recent Consumer Spend Report revealed that traditions like ‘Secret Santa’ gift swaps and presents for coworkers are on the chopping block as consumers instead prioritize gifts for their loved ones. This isn’t surprising given many people are especially focused on improving their financial health. Specifically, almost half of Gen-Z and over a quarter of Millennials say saving money is their top New Year’s resolution as they look ahead to 2023.
Drenik: So, this year’s holiday shopping season will look a lot more intentional. What is intentional gifting?
Pancholi: Intentional gifting is the act of prioritizing holiday spending on loved ones and giving gifts they will appreciate. Many plan to do this within their inner circles this year. Affirm data shows about half of Americans plan to spend $100 or more on significant others and immediate family members, which is an increase from what we saw last year.
Drenik: Has Affirm detected any major shifts around what people are buying this holiday shopping season compared to last?
Pancholi: Absolutely. This time last year, the world was slowly making its way back to normalcy — friends, families, and coworkers began going out to dinner more often, going to live events, and taking trips again. In 2021, Affirm found that more than half of Americans planned to spend more on experiences — like traveling or live events — over physical gifts. In fact, the top gift Americans planned to give to their loved ones in 2021 was a memorable experience, such as tickets to a concert or sporting event.
This year, our research revealed that 85% of Americans plan to buy physical gifts that their loved ones can unwrap. A recent Prosper Insights & Analytics survey found that clothing, accessories, toys, books, video games, consumer electronics and computer-related accessories are among the top gifts people plan to purchase. We saw this first-hand at Affirm over Black Friday – many of the top items by units sold were consumer electronics such as video game consoles, virtual reality headsets, and headphones. Faux leather leggings were also popular.
Drenik: With people changing what they buy and who they shop for, are they also changing how they shop for the holidays this year?
Pancholi: Definitely. They’re starting their holiday shopping earlier and planning to buy things at discounted prices. According to Prosper Insights & Analytics’ latest research, that is because more than four in five people agree that it’s better to start shopping earlier to find the best deals or to avoid rising prices as the holiday season progresses.
They are also changing the way they pay, and possibly avoiding credit cards as a result. Affirm found that only about a third plan to use credit cards for gifts this year, down from about two-thirds last year. That’s a 50% decrease.
Drenik: Do you have any advice for budget-conscious consumers who want to practice intentional gifting this holiday season?
Pancholi: Sure! First, set a budget before you start shopping and make a list of who you want to give gifts to this year. Having a clear picture of your spending plans will help to ensure you don’t overextend yourself. Second, use a pay-over-time option, like Affirm, that never charges late or hidden fees to spread out your costs and help stay within your monthly budget. If approved, you can use Affirm nearly anywhere you want to shop and doing so, can help you increase your purchasing power responsibly. Third, watch out for gotchas and gimmicks. Surprise fees, often hidden in places like 0% APR credit card promotions, can quickly take you off track.
Drenik: Thank you Ashmi, it was great to hear from you. Happy holidays.