I have been closely watching inflation. Not just inflation as it pertains to the cost of toys but inflation as it impacts the cost of groceries, medicine, and other must-haves. When people pay higher prices for things they must have (food, medicine, and housing), they become reluctant to spend on what they would like to have (toys, as an example). That’s why I heard alarm bells go off when I saw this Bloomberg headline: “Lower-Income Americans Starting to Opt Out of Holiday Spending.”
The article reports on the results of a survey conducted by Deloitte LLP. According to the article:
The survey, released Wednesday, shows that 11.5% of U.S. holiday shoppers say they plan not to spend anything on gifts and services this holiday. That’s up from 4.9% in 2020 and 2.9% the previous year. It’s the highest in at least 10 years, according to Rod Sides, a vice chairman of Deloitte.
That is a big jump. Roughly four times as many people as in 2019 are not planning to spend on Christmas this year. But who are these people? According to the survey, they are primarily people with a less than $50,000 annual household income.
Deloitte is predicting, however, that despite the drop-off in lower-income shopping, consumption will increase 7 to 9% this holiday season. That’s because our more affluent classes are feeling more flush.
I have asserted before that there is no longer an average American shopper and that, as a result, there is no average price point. Those who have will pay more, while those who do not have will drop out or cut back.
Which segment of the population are you targeting with your products and pricing?