What's Happening?
Gen Z shoppers are expected to significantly reduce their holiday spending this year due to economic pressures and declining consumer confidence. A survey by Deloitte indicates that overall consumer spending will
drop by 10% compared to last year, with Gen Z's spending projected to fall by 34%. The survey highlights that economic pressures are particularly affecting younger generations, leading to a decrease in spending on both retail goods and experiences. This trend is occurring amidst a broader decline in consumer confidence, as indicated by the University of Michigan's survey, which shows sentiment at its lowest since May.
Why It's Important?
The anticipated reduction in holiday spending by Gen Z could have significant implications for retailers and the broader economy. As younger consumers pull back on spending, businesses may face challenges during the crucial holiday shopping period. This trend reflects broader economic concerns, including inflation and weakening labor markets, which could impact sales and economic growth. Retailers may need to adjust their strategies, such as offering more discounts, to attract cautious consumers. The outcome of this holiday season could serve as an indicator of economic resilience or further decline.
What's Next?
Retailers are preparing for the holiday season by rolling out discounts to entice shoppers, despite forecasts of reduced spending. Companies like Walmart and Macy's remain optimistic, citing strong back-to-school sales as a positive indicator. Analysts suggest that the holiday shopping period will reveal the direction of the economy, with potential polarization between successful and struggling retailers. A poor holiday season could signal weakening consumer resilience and set a negative tone for 2026.
