The Economics of Christmas – A Statistical Look at Holiday Spending
The economics of Christmas are a big deal for the global economy - and we're not just talking about buying Christmas gifts for economists. Indeed, the Christmas shopping phenomenon carves out a very busy season for consumers and retailers around the world.
Many economists have tried to analyze Christmas shopping. After all, buying Christmas gifts is a complex phenomenon, not least because of the challenges of choosing the right gifts for the right person.
Another element of Christmas shopping is purchasing food, trees, and decorations. Shopping for these items, among others, makes up the economics of Christmas - something marketers should be quite familiar with.
But what do people usually spend the most money on during the holiday shopping season? Do more Americans buy gifts than Brits? Do Europeans prefer to shop for decorations rather than gifts?
These burning questions are the reason why we've put together this guide to the economics of Christmas and the statistics of holiday spending. Let's dive in.
Key Holiday Spending Statistics- The global market for Christmas decorations was estimated to be$6.8 billion in 2021 and is forecast to grow to surpass$9 billion by 2026.
- In 2023, the value of holiday shopping in the US is predicted to reach almost $1trillion - $30 billion more than in 2022.
- Christmas will cost US households an average of $1,171 in 2023.
- The UK's estimated Christmas retail sales are predicted to reach almost85 billion in 2023.
- Online-only retailers will be the preferred Christmas shopping destination forover 60% of US consumers in 2023.
- 55% of US consumers are planning to use Buy Now, Pay Later services, credit cards, or lines of credit this holiday season.
- In the UK, retailers are planning to spend 9.5 billion on holiday advertising in 2023.
People shop for different things during the Christmas season. Of course, gifts are the biggest ticket item, but other purchases, such as Christmas trees and decorations, are also worth considering.
Gifts
Source: Statista
We all love giving and receiving Christmas gifts - although the planning aspect of it can be stressful. One of the most stressful things about Christmas shopping is figuring out what to get for everyone.
In the last two years, over 75% of American consumers bought clothes, toys, hobby items, and gift cards for their loved ones. In the UK, the most desirable gifts in 2022 were cash transfers (44%), clothes (40%), and cosmetics (39%).
Trees & Decorations
Source: Statista
Christmas decorations are an integral part of the holiday, and people love them. The global market for Christmas decorations was estimated to be$6.8 billion in 2021 and is forecast to surpass $9 billion by 2026.
However, inflation is a major concern for Christmas shoppers today, and the cost of decorations is as affected as other areas. For instance, the price of gift wrap saw an inflation rate in 2022 of 16.4%.
Many people across generations are inspired by social media content when it comes to shopping for Christmas decorations. Here's an overview of where people shop for decorations across three major markets:
| Shopping Channels | USA | UK | Germany |
| Department stores | 35% | 32% | 23% |
| Discount retailers | 31% | 35% | 24% |
| Online | 31% | 31% | 36% |
| Decoration stores | 21% | 20% | 29% |
| Xmas markets | 17% | 27% | 31% |
| Hardware stores | 14% | 7% | 18% |
| Flea markets | 10% | 6% | 9% |
| Drugstores | 9% | 3% | 17% |
| Furniture stores | 7% | 7% | 9% |
| Flower stores | 7% | 6% | 12% |
As for Christmas tree shopping, 21% of US Generation Z membersspent between $25 and $50 on trees in 2022. Only8% didn't buy a tree.
The largest group of those aged 30 to 49 spent between$50 and $75 (21% of consumers), or $25 to $50 (18%). As for Baby Boomers, the largest reported group, at 14%, chose not to spend over $50.
Christmas Spending by Region
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Almost a third of consumers around the world reported in 2022that inflationwas their biggest holiday shopping challenge. Others were economic uncertainty, lost earnings, and lack of savings and credit. Let's take a look at how consumers in different countries are spending with their Christmas shopping.
US Christmas Spending
Source: Statista
In 2023, the value of holiday shopping in the US is predicted to reach almost $1 trillion- $30 billion more than in 2022.
According to WorldRemit, Christmas will cost US households an average of $1,171 in 2023. In 2022, US consumers spent an average of $867on Christmas gifts - approximately 70% of all Christmas expenses, with the rest going towards Christmas food and decorations.
In 2023, almost 75% of Americans will be buying fewer gifts, according to Ipsos, due to inflation. Some38% will be buying cheaper gifts, and26% will reduce the number of peoplethey're buying gifts for.
When it comes to American parents buying gifts for their children, 21% of them spent $50 to $100 per gift in 2022. Only 17% spent more than $200, and 7% spent less than $25.
Christmas Spending in Canada
Source: Statista
Gift spending made up the lion's share of Canadian Christmas shopping in 2022, with decorations spending being more than 50% less. However, there are noticeable generational differences when it comes to Canadian Christmas shopping.
For instance, Canadian Generation Xers spent the most on Christmas shopping in 2022 - over CA$1,500. The smallest spenders - understandably, given their weaker purchasing power - were Gen Zers. Their average expenditure that year was CA$1,173.
As in the US,many Canadian consumers have had their Christmas shopping adversely impacted by inflation, withover 61% reporting this. For others, adverse factors included rising food prices (53%) and rising fuel prices (32%).
Christmas Spending in Europe
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How does European Christmas spending differ from American and Canadian? Let's find out.
United Kingdom
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On average, every UK consumer will spend around 54,000 in their lifetime on Christmas shopping. A significant percentage of this spending will be on Christmas gifts.
In 2023, UK consumers are predicted to spend the most on toys (41 on average per consumer), which was also the case in 2022.
As for clothing, the average expenditure per consumer in 2023 is rated higher than in 2022 - 36 compared to 24.The biggest Christmas spenders in the UK in 2023 will be London, with sales forecast to reach 15.36 billion in the region.
Here's a breakdown of UK regional Christmas spending forecasts for 2023 and YoY growth compared with 2022.
| Region | Xmas 2023 spending, billion | YoY Growth |
| London | 15.36 | 3.3% |
| South East | 13.07 | 2% |
| North West | 8.33 | 4.5% |
| East England | 8.25 | 1.4% |
| South West | 6.99 | 3.7% |
| West Midlands | 6.84 | 4.1% |
| Scotland | 6.75 | 3.9% |
| Yorkshire & Humberside | 5.80 | 2.3% |
| East Midlands | 5.39 | 4.2% |
| Wales | 3.50 | 4.5% |
| North East | 2.70 | 5.9% |
| Northern Ireland | 2.07 | 4.8% |
Source: Statista
Despite the cost of living crisis in the UK, the country is forecast to be the European leader in total Christmas spending. The country's estimated retail Christmas sales this season are predicted to reach almost85 billion.
To compare, Germany's spending is forecast to reach 74 billion and Belgium's to reach just 9.72 billion.
In some European countries such as the Netherlands, people spend just as much on Christmas food as they do on gifts - not least because a lot of gifts are given on Sinterklaas Day rather than on Christmas Day.
In fact, almost 30% of Dutch Christmas expenses go towardsgroceries. Another 10% is spent on winter clothes, and sweets and homeware are responsible for 7% each.
Christmas Shopping by Method
Source: Statista
Traditionally, brick-and-mortar retailers went all out during the Christmas season, decorating their stores and playing Christmas music. Today, this tradition still holds in some places - after all, people do still shop in stores. However, with advancements in ecommerce, there are more Christmas shopping options available than ever.
In this section, we'll take a look at how people around the world do Christmas shopping and how they pay for it.
Online
Source: Statista
As we mentioned above, about a third of consumers in the US, the UK, and Germany shop for Christmas decorations online. But what about gifts?
In our guide to holiday shopping, we noted that online Christmas shopping is growing exponentially, and 2023 isn't an exception to this trend.
Over 50% of consumers bought gifts online in 2022, and more are expected to do so in 2023. In fact, forecasts predictthat online-only retailers will be the preferred Christmas shopping destination forover 60% of US consumers in 2023.
In Germany, the figure for online Christmas shopping in 2022 is just as high, at 62%, with many Germans choosing to shop online to avoid crowds and find better priced options.
For the UK, that figure is smaller, atonly 31%, but it's still 1% higher than in 2022. A significant reason for the smaller percentage may be a sign of British consumers wanting to support smaller local businesses without an online presence after COVID-19.
However, 40% of UKconsumers confirmed that they'd be encouraged to shop more with small businesses if they price-matched online discounts.
Mobile
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We've explored the rise of mobile commerce in previous guides and, given this, it would be wise for retailers to ensure their websites are optimized for mobile shopping.
According to a VoucherCodes report, mobile commerce spending in the UK this holiday season will increase by almost 8% in 2023 compared to the previous year, to reach 12.52 billion. A big reason for this is social media apps' various integrations with ecommerce tools - something Gen Z consumers appreciate most of all.
OfflineDespite the popularity of ecommerce, some consumers still prefer traditional brick-and-mortar Christmas shopping. In 2021 and 2022,43% of US Christmas shoppers preferred to shop in-store rather than online- an understandable increase of 4% from 2020, with the lifting of COVID-19 restrictions.
Most Popular Payment Methods
Source: Statista
With Christmas shopping getting more and more expensive, people are increasingly turning to debt to finance their purchases. We'll now take a look at the most popular payment methods for Christmas buys.
BNPL & Credit CardsHolidays can get very expensive. Because of this, we're seeing a lot of consumers take on debt to cover Christmas shopping. For instance, in the US, 55% of consumers plan to use Buy Now, Pay Later services, credit cards, or lines of credit this holiday season.
Credit cards were also used by 21% of British consumers in 2022. Over 8% were planning to use store credit or payment plans. BNPL was preferred by 4% of UK consumers in 2021, with 7.7% planning to use it in 2023.Another 3% will turn to payday loansin 2023.
Debit Cards & CashCash and debit cards were the preferred payment method of UK consumers in 2021, chosen by over 50% of consumers. In 2023, 41% of British consumers will be using debit cards, with cash being favored by 18%.
In terms of funding, 66% of consumers used their salary to fund Christmas gifts in 2022 - a figure that's expected to drop to 64% in 2023. Savings will be used by 20% of UK consumers in 2023.
Holiday Season Marketing & Advertising StatisticsThe holiday season is a special time for retailers and marketers, as they have to tailor their strategy to the period. In this section, we'll take a look at the key marketing statistics during this holiday period, especially those related to spending.
Christmas Ad & Marketing Statistics
Source: Statista
In 2023, 31% of American retailers say they're planning to increase holiday ad spending, while 55% are planning to keep the budget at 2022's levels. Only 12% will spend less. This shows that retailers are seeing the value of holiday advertising for reaching the people.
In the UK, retailers are planning to spend 9.5 billion on holiday advertising in 2023, according to the Advertising Association. This figure amounts to a 4.8% increase on 2022. Another 1.5 billion will go on TV advertising.
When it comes to email marketing,retailers have a lot to play with. Almost 70% of consumers pay more attention than usual to retailer emails in their inboxes during the holiday shopping period.
And mobile optimization is key - 55% of emails today are opened on mobile, and if the email isn't optimized across devices, 42% of consumers will delete it.
Social Media Marketing
Source: Statista
Social networks are an increasingly important source of shopping inspiration for people across all generations - and the holiday season is no exception for this.
In 2022, over a third of American consumers used social media for their Christmas shopping, and given the growth of this trend over the last three years, we're expecting that it'll be even more prevalent in 2023.
Here's a breakdown of the social networks that had the most influence on Christmas shopping in 2022:
| Social Network | Percentage of influenced purchases |
| 43% | |
| YouTube | 36% |
| 35% | |
| 31% | |
| TikTok | 29% |
| 13% | |
| Snapchat | 13% |
Christmas shopping has been impacted by several trends in the last few years - namely, inflation and the cost of living, consumers' increased interest in sustainable shopping, and changes in shopping preferences, such as ecommerce vs. traditional retail.
Although we don't know what the future holds for holiday spending, we can make a few educated guesses.
Digital TransformationWe're already seeing the huge impact of digital transformation on holiday shopping - ecommerce and mobile commerce are just two examples. With the advancement of technologies like AR/VR and AI, it's not hard to imagine them making their way into Christmas shopping. Some examples include:
- Seeing how Christmas ornaments look in your home with AR
- Trying on Christmas jumpers virtually
- Personalized AI product recommendations based on your past purchases.
And speaking of personalized products...
Personalization is emerging as a key driver for holiday spending trends, with 90% of marketers saying that it makes a huge difference to their profitability.
Data analytics and AI advancements enable businesses to analyze customer preferences, which allows them to tailor and deliver highly personalized offers. From customized recommendations to tailored promotions, businesses use technology to create a more personalized holiday shopping experience.
This trend not only enhances customer satisfaction but also enhances brand loyalty, ensuring consumers come back for Christmas shopping, year after year.
SustainabilityThe popularity of anti-Black Friday campaigns, coupled with consumers' increased awareness of environmental issues, points to a shift toward more conscious and sustainable shopping.
Consumers prefer to buy from brands that align with their values, and companies are responding to the trend - although some are doing better than others.
This shift encourages businesses to implement sustainability strategies across their entire operations, which is both a response to changing consumer needs and a channel to encourage individuals to shop more sustainably.
Closing ThoughtsHoliday shopping is a busy and sometimes stressful time. For consumers, the range of gift choices and questions of what to buy for whom can be overwhelming. Coupled with inflation and the increasing cost of living, planning for Christmas in 2023 is a huge challenge.
For retailers, it's no picnic either. Creating and coordinating holiday marketing campaigns is a big job, and so is monitoring their success and analyzing how much people are spending and what they're shopping for.
However, capturing this data is essential - not only for developing the following year's holiday season marketing strategy but also for learning about your consumers' preferences and monitoring changes in their behavior.
And that's why we've put together this guide to holiday spending - to help you tailor your strategies and ensure you're using the right benchmarks.
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- Purchase channels for Christmas decorations in the U.S., UK, and Germany in 2022 (Statista)
- Sources of inspiration for Christmas decorations in Germany in 2022, by generation (Statista)
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