Among other things, the report points out a significant shift, particularly driven by lower-income households, who are moving away from traditional brick-and-mortar (B&M) stores in search of better online deals.
“Compared to 2019, 5% of in-person B&M spending during the holidays has shifted away from Black Friday and Christmas Eve last year, as consumers shop earlier and online,” the report states. Meanwhile, Cyber Monday has gained a 2% share of holiday spending, signaling a growing preference for online convenience over in-store experiences.
This surge in online shopping, which accelerated during the pandemic, has shown little sign of slowing down, even as restrictions have eased.
The August 2024 data suggests that online spending made up 26% of total retail card spending, with a 1.5 percentage point increase over the past two years, largely driven by households earning less than $50K annually.
This trend of “trading lines for screens” is especially relevant during the holiday season, as consumers seek convenience and savings. For example, online sales peak around Cyber Monday, with a bump seen again just before Christmas as shoppers allow time for deliveries.
Interestingly, higher-income households have not abandoned shopping malls to the same extent.
While lower-income consumers have shifted significantly to online platforms—mall spending for these households has fallen 20% since 2021—higher-income households have only reduced their mall expenditures by 4%.
“This suggests much more stability for higher-end shopping malls,” BofA remarked.
Overall, the bank’s findings indicate that while traditional holiday hotspots like Black Friday and Christmas Eve still hold sway for B&M spending, their influence is waning.
The share of holiday spending happening in malls during the two weeks around Christmas dropped to 15% in 2023, down 3 percentage points from 2019. In contrast, online spending during the same period has risen to nearly match that of B&M stores.
“13% of 2023 total retail (excluding groceries, restaurants and gas) spending during the holidays occurred online in the two weeks around Cyber Monday, up 2 percentage points compared to 2019 and now accounting for nearly the same share of retail spending during the holidays as B&M retail spending around Black Friday,” BofA said.
Looking ahead, it will be interesting to see if recent port strikes will have an impact on holiday shopping trends, though BofA Global Research suggests minimal disruption unless the strikes are prolonged. Retailers may absorb additional costs to avoid passing them on to consumers.
As the 2024 holiday season approaches, online spending is expected to grow, with consumers shopping earlier.
Lower-income households, in particular, will likely focus on value and bargains, making the retail landscape highly competitive.
Source: Economy - investing.com
