Consumers are feeling financial pressure, but apparel could still come out ahead this holiday season.
UBS retail analyst Jay Sole said on Monday that his firm’s proprietary market research for November indicates U.S. consumer spending intentions for soft goods over the next 90 days is up 5.1 percent year-over-year. That’s a data point that marks two months in a row of 5-percent-plus growth, which Sole said hasn’t occurred in at least nine years, excluding the pandemic. Moreover, spending inventions versus November 2022 rose 3.9 percent.
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The UBS data also found that only 20.9 percent of U.S. consumers have finished their shopping as of mid-November, and 74 percent said they will shop in-store or online over the Thanksgiving weekend. That should bode well for the rest of the holiday season, given the one week late start of the Thanksgiving weekend this year.
Moreover, the UBS survey found that the No. 1 reason, at 57 percent, that U.S. consumers said they will shop over the holiday weekend is because “the deals are too good to pass up.”
And even though the percentage of people who plan to buy apparel is down 2 percent year-over-year for holiday, Sole has good news for fashion brands and retailers. “Clothing should be one of this year’s most popular gifts,” the retail analyst concluded.
Macy’s on Monday posted preliminary third quarter results that showed net sales down 3.1 percent and comparable sales down 3 percent on an owned basis. Despite the slowdown, dresses and men’s and women’s active apparel were the strong categories for the three-month period ended Nov. 2. The company has delayed its full third-quarter report until Dec. 11, due to an accounting irregularity involving delivery expenses in one of its accrual accounts.
But the question remains how will shoppers pay for their holiday spending.
More than half of consumers (53 percent) plan to use credit cards to stretch their budgets, according to a Deloitte 2024 Black Friday Cyber Monday (BFCM) survey. That’s up from 35 percent in 2023. In addition, 62 percent plan to stretch their BFCM budgets through financing methods, including 29 percent who plan to take advantage of “Buy Now Pay Later” options.
While all gift categories are expected to see higher purchase rates as consumers seek discounts, the Deloitte survey also saw 77 percent of respondents indicating they they plan to purchase apparel and accessories, making it the top category for holiday. Coming in second was electronics and accessories at 57 percent, and toys and hobbies at 54 percent to round out the top three holiday picks.