News

With the holiday shopping season just around the corner, the National Retail Federation anticipates consumers to budget an average of $890 for gifts and holiday spending this year—even with reports that retail sales have declined. 

St. Olaf College Associate Professor of Economics and Department Chair Allison Luedtke speaks about holiday shopping trends.

What do the anticipated holiday spending patterns reveal about consumer confidence in the economy?

When we ask consumers what they’re planning to buy and spend this holiday season, we’re hearing that they are planning to spend less overall, and will focus more on high-value products that last. Additionally, they’re planning to shop in-person more than in the past few years. All of this indicates that consumers are worried about the economy — they’re seeing prices of everyday items rise and are already looking ahead to next year. If these price increases continue, and salaries don’t rise accordingly, consumers will feel like they simply cannot afford to spend as much as they have in previous years on holiday expenses.

Are younger shoppers, such as those belonging to Gen Alpha and Gen Z, approaching holiday shopping differently from older generations? What may those differences or similarities say about shifting values around gift-giving?

While many people associate younger generations, like Gen Z and Gen Alpha, with digital platforms and the influencers that come with them, most of their shopping dollars actually go to in-store purchases. Additionally, Gen Z in particular really values sustainability in their purchases. As we approach the holiday season, we should expect to see businesses targeting younger shoppers through a combination of new and old methods. We should expect influencers and social media to highlight sustainability, but also expect businesses to attract shoppers into brick-and-mortar stores with sales and ads. 

How have online shopping trends — such as early Black Friday deals or social media-– driven purchases — changed the traditional Thanksgiving-to-Christmas shopping window?

Holiday spending is absolutely bleeding out beyond the traditional timeframe. It used to be that Black Friday was even considered an early start to holiday shopping. Now, there are events like Amazon’s “Fall Prime Days” in mid-October. I almost bought my Christmas cards in October because Shutterfly was having a sale that only lasted until October 24. 

This increase in targeted shopping days is likely driven by companies’ concerns about the effect of increased prices on consumers’ spending. Knowing that consumers are possibly going to spend less this holiday season, companies are trying to secure some dollars while they can. 

Are rising living costs and inflation shaping consumer spending habits during this year’s holiday season?

Consumers are seeing the sharpest increase in prices right as they begin to think about holiday shopping. This is expected to lead to a decrease in overall holiday spending because consumers are worried about the economy and their own buying ability. This economic insecurity is expected to manifest as a decrease in total dollars spent, a higher focus on things that last, and shopping in-store to take advantage of Black Friday–style sales. 

How does your work at St. Olaf support students’ understanding of personal finance trends?

The classes we offer in the Economics Department are designed to help students understand the world around them and make the best decisions. I am currently teaching Principles of Economics, the first course that students take in the field. We focus on learning the tools and building blocks of economics, so that when they encounter them in the media or in their jobs, they’ll be able to engage with them confidently. Next semester, I’m teaching Game Theory, in which students learn how to strategize in situations where someone else’s choices affect their outcomes. Some of these consumer choices will be driven by questions like: How should you set your prices in a competitive market? How should you negotiate a trade agreement between three different groups? How should you plan a Thanksgiving meal among disparate family branches? These are some of the questions we’ll answer. 

Allison Luedtke is an associate professor of economics at St. Olaf College, specializing in network economics. Through her teaching and research, she helps people understand and navigate the complexities of the modern economy. She has published work on how banks lending to each other can lead to financial crisis; college peer effects; and tracking how digital currency is exchanged by consumers, in order to help us understand how different communities were impacted during the pandemic.For media inquiries, contact St. Olaf Director of Public Relations Kat Dodge at dodge2@stolaf.edu.