All Things Money: Holiday Season, Most Magical Time, in Deed

It's impossible to learn about All Things Money without looking into the economic impact of the Holiday season.

The holiday season starts at the end of November with Thanksgiving and Black Friday, then continues to Christmas, and Hanukkah to finish in the New Year.

Stores and retailers know that shoppers are busy over this period, and their needs for goods and services quickly rise. 

As a result, businesses of all shapes and sizes rely on this period to turn a profit and, in many cases, to keep the lights on for the following year.

Continue reading for an in-depth look at consumer spending and its impact on businesses over the holiday season.

How Shoppers Celebrate the Holidays

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Before we get into the details and impacts of the season, let's take a quick look at some of the ways people spend money over the quarter:

• Winter vacations- Some people visit ski slopes and cold areas in the cold weather.
  While others escape to the beach, bringing a slight boost to tourist venues in warmer climates.
• Family gatherings- Families meet up with each other over the holiday season for Christmas, Thanksgiving, Hanukkah, and New Year's.
  These gatherings mean more money is spent on food, drink, alcohol, and gifts, boosting retail sales.
• Gift giving- The most significant spending over the holiday season comes from people buying gifts for each other.
  Some US families spend thousands of dollars annually on gifts for their family and friends.
• Decorations- Decorations are an essential part of the holiday season.
  Nearly everyone puts up some decorations for one celebration or more over the period.
  These decorations are often complex and expensive, especially for people who celebrate Christmas.
• Cold weather spending- From warm socks & cocoa to heaters & snow ploughs, consumers need to pay for certain expenses to cope with the cold weather of winter.
  In colder areas, people will also need to pay for winterization of vehicles and property for safety reasons.

How companies benefit from the season

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A considerable number of companies rely heavily on the holiday season to turn a profit over the year.
Since consumers spend more money over this period, companies gain on this by increasing their advertising and marketing efforts.

Many companies make so much money over the holiday season that it makes up for poor performance during the other three quarters of the year.

This increase in sales can keep the doors open in a struggling business or turn a bust year into a boom year and make a company profitable.

Big Season for a Strong Year Close

In 2023, stores are preparing for a big holiday season to bring a big close to the year on their balance sheets. 

See below for some insights into which companies make money from where over the holidays:

Last Year's Data

To gain insight into what's expected from the coming year's high season, let's examine Adobe’s Analytics Online Retail Insights for 2022 Holiday Season:

1. $211 Billion was sold through e-commerce over the period.
2. Total spending grew by 3.5% compared to the previous year.
3. Huge increases of sales were found in specific categories:
1. Toys + 206%.
2. Clothing +94%.
3. Video Games + 115%. 
4. Online retail continues to grow in size , with 29% coming from search-related sales.
5. The biggest discounts went to toys (34%) for 2022
6. 47% of the online sales came through smartphones.

What is Expected This Year:

According to the National Retail Federation's 2023 Consumer Holiday Survey, carried out by Prosper Insight & Analytics, this is what’s expected for this season:

1. Total spending is expected to reach new record highs of $957.6 billion and $966.6 billion.
2. Online and non-store sales are expected to increase between 7 and 9%, to a total of between $273.7 billion and $278.8 billion, 58% of surveyed mentioned Online as one of their shoppings destinations.
3. $875 is the expected average spending per consumer, allocating $620 on gifts and $255 on other seasonal items.
4. Shoppers are expecting to make their shoppings earlier and finish later.
1. 41% of them expected to start before November.
2. 58% of them expected to end in December.
5. Big discounts
1. Toys and electronics are expected to see the biggest discounts for the period.
2. Appliances and computers are also expecting significant discounts.

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A Quarter with many events

The holiday season brings with it a bunch of holidays for retailers to capitalise on. It's not just Christmas and Hanukkah that bring people into stores for supplies, decorations, and gifts. 

So, let's take a quick look at some of the other common celebrations over the holiday period:

Thanksgiving and Black Friday

Celebrated on the fourth Thursday of November in the US, Thanksgiving is the start of the holiday season. 

During this holiday, consumers typically buy some decorations, food, and beverages, which boosts shops.

However, it's the day after Thanksgiving when things kick into gear. 

Black Friday is the biggest retail day of the year, and it represents the beginning of the peak of the retail season. 

Over Black Friday, consumers spend big, and retailers offer huge savings, allowing people to buy early Christmas gifts at a low price.

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Christmas

Christmas is the driving force behind big spending over the holiday period.

Hundreds of millions go out to buy gifts of all shapes and sizes for the people they care about in their lives. As a result, the weeks leading up to Christmas bring more shoppers to stores daily.

This culminates in Christmas Eve, the biggest day of Christmas-driven shopping, where shoppers rush to buy everything they need for the holiday period.

Hanukkah

During the Hanukkah celebrations, people spend money on particular cultural foods, decorations, and gifts to participate in the celebrations. Also, since Hanukkah is the festival of lights, many people will buy a lot of candles to celebrate the holiday.

New Year

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New Year's Eve gives retailers a boost through sales of clothes, alcohol, food, and party supplies. 

Bars, clubs, and restaurants also do well over New Year's as people head to celebrate the dropping of the ball. 

On top of this, New Year's Day marks the beginning of the January sales, where stores offer discounts in an attempt to keep shoppers spending after the holidays.

Conclusions

The holiday season is the most magical time of year for retailers. 

It brings huge sales and discounts that people can take advantage of, and shops are always packed with shoppers trying to buy Christmas presents, decorations, food, and drinks. 

This high spending period helps keep the economy afloat as billions of dollars are spent worldwide in weeks.