The Covid-19 pandemic has affected the lives of millions, and its impact will trickle into how much, and where, consumers plan to spend this holiday season, according to Discover’s annual Holiday Shopping survey.
The number of consumers who plan to curb spending almost doubled in one year, from 18% in 2019 to 35% in 2020.
The survey also shows Generation Xers and millennials are the most likely to cut back their spending this year, 42% and 36%, respectively.
Financial instability and disrupted social engagements are the top reasons consumers report shifting their budgets.
Of those who plan to spend less:
- 37% attribute their decision to financial instability caused by COVID-19
- 32% attribute their decision to spend less on food and decorations due to a lack of holiday gatherings
- 28% attribute their decision to no longer needing to travel like they have in years past
Meera Sridharan, vice president of rewards and product strategy at Discover, said:
“As consumers navigate holiday spending decisions, we’re here to help them get the most for their money. The Discover it® Cash Back card, for example, has a rotating rewards calendar that complements consumers’ shifting spending throughout the year, and given the acceleration in online shopping, we are featuring top ecommerce retailers for this holiday season.”
Contactless Payments Increase
As consumers change their holiday plans, they are also changing where they are shopping. In light of COVID-19, 74% of consumers will be shopping online more, and 61% said they will participate more in online shopping holidays such as Cyber Monday, Discover’s survey shows.
A strong majority of younger consumers also plan to support small businesses. Seventy-seven percent of Gen Z and 70% of millennials said they would be shopping more frequently at small businesses this year compared to 61% of Gen X and 49% of boomers.
In addition, younger generations plan to get a head start on their holiday shopping. Seventy-seven percent of Gen Zers and 71% of millennials reported they would start shopping earlier this year, compared to 60% of Gen X and 42% of boomers.
Of those who plan to do most of their holiday shopping online, nearly half of those surveyed, 49%, said they are doing so to better protect their health during COVID-19, and 38% reported a discomfort shopping near crowds in-store.
Even when shopping in-store, consumers are favoring contactless technology, as 68% of respondents said they will use contactless payments more to avoid touching public surfaces, and 66% said they would use less cash as a result of the COVID-19 pandemic.
Consumers across all generations are using contactless payments when shopping for the holidays, the survey found. Notably, 78% of millennials said they would be using contactless payments more frequently, followed by Gen Z, 75%, Gen X, 70%, and boomers, 60%.
Fraud Concerns Sharply Increase Among Gen Z
Even as more consumers are planning online transactions, their overall concern with fraud remains about the same as it was last year.
Eighty-five percent of consumers reported some level of concern about identity theft and fraud in 2020, compared to 83% in 2019.
However, Gen Z’s concern rose sharply. Fifty-nine percent of Gen Z reported moderate- to high-concern about the risk of fraud – an increase from 33% in 2019.
In addition, more Gen Zers are taking measures to protect themselves against identity theft this year. In 2019, 32% of Gen Z said they did not do anything to protect themselves from identity theft, but in 2020, that number dropped to a mere 18%.