Shoppers Boost Gift-Giving Budgets But Proceed With Caution Into Holiday Season

Going into this holiday season, shoppers are budget-conscious and hungry for deals, but they find it hard to resist impulse buying. Retailers can expect fierce price competition, but they can avoid a race to the bottom by using artificial intelligence (AI) to provide enticing recommendations, simplify gift discovery, and deliver relevant personalized offers that have value beyond the size of the discount.

There are five fewer days in the holiday shopping season in 2024. Last year, Thanksgiving was on Nov. 23. This year, it falls on Nov. 28, leaving just 26 days until Christmas. This puts pressure on retailers to meet year-over-year sales goals within a shorter period, and both Christmas and Hanukkah shoppers will be crowding stores and flocking to e-commerce sites to fulfill their holiday lists during the same compressed timeframe.

In a report titled “Gift or Grinch? Unwrapping This Season’s Shopper Spending Plans,” Coveo provides shopper insights for retailers as they brace for a frenzied holiday period. It's based on a survey of 2,000 U.S. and 2,000 UK adult consumers conducted in July by Coveo in partnership with Arlington Research.

Most shoppers are willing to spend more on holiday gifts for friends and loved ones this year. More than three-quarters (76 percent) of shoppers surveyed are planning to maintain or increase their gift giving and spending in 2024 as compared to last year, and 85 percent say they often make impulse purchases online — an opportunity for retailers to offset discounting by promoting higher-margin purchases.

For many shoppers, a commitment to holiday cheer comes at a sacrifice, with 59 percent trimming other expenses, such as meals and entertainment outside the home, to afford gifts and festive meals. Millennials, at 68 percent, and Gen Z shoppers, at 74 percent, are most likely to cut corners.

Shoppers are generally enthusiastic about holiday shopping, however, 85 percent expressed one or more concerns, including worries about the cost of gifts (29 percent), finding the right gift (14 percent), and getting gifts delivered on time (11 percent).

Black Friday and Cyber Monday Remain Relevant

The Coveo holiday survey finds that more than two-thirds (68 percent) of shoppers expect to visit one or more retailers — online, offline, or both — during Black Friday and Cyber Monday.

Black Friday started in the U.S. but is now embraced overseas. While 73 percent of U.S. consumers expect to be bargain hunting on Black Friday/Cyber Monday, 64 percent of UK shoppers will be, too.

In addition to the rush of finding great deals, shoppers enjoy being part of the cultural experience of Black Friday/Cyber Monday. In last year’s survey of U.S.-based retailers by Coveo and RSR Research, 89 percent of retail leaders agreed that “consumers like the ‘buzz’ associated with big holiday special events.”

Consumers in this year’s holiday shopping survey were asked how they find deals, and 80 percent use digital sources, including online or in-store store advertising and signage (48 percent), email (36 percent), social media platforms (35 percent), and online search (32 percent).

However, retailers have a better chance of increasing basket size by providing relevant recommendations to shoppers while they're using e-commerce websites. Ninety percent of consumers surveyed said they can be enticed to add items to an existing order when shopping online.

Tap Into Positive Emotions and Lend Shoppers a Hand

Almost half (45 percent) of U.S. shoppers and 39 percent of UK shoppers say they enjoy the thrill of finding the perfect gift.

Others are less enthusiastic, with 19 percent of survey participants admitting that they dislike holiday shopping due to the time and expense required, and 20 percent saying they view it as just another chore.

All three groups want retailers to make it easier for them to meet their respective emotional needs. When asked whether specific site search categories such as “gifts for dad” or “gifts under $50” would be helpful when gift shopping online, 61 percent of respondents said yes.

In addition, 31 percent of shoppers said they would appreciate an advisory experience powered by generative AI while they're trying to select holiday gifts. The percentage spikes to 44 percent for millennials.

This data should encourage retailers to experiment with AI-led strategies and learn how to deliver exceptional product discovery and relevant, personalized offers during the holidays and continuing in 2025.

Providing discounts and offers is table stakes for retailers competing during the holiday season, but they can leverage other tools to increase basket size and profits. By combining creativity and technology, retailers can direct shoppers to higher-ticket, higher-margin products they will be happy to give as gifts or to reward themselves.

Lisa Grayston is vice president of commerce operations at Coveo, the leading enterprise AI platform that brings AI Search and generative AI to every point–of-experience.