November 22, 2024
©shironosov via Canva.com
What’s Driving Holiday Gifting Around Experiences?
Fewer pandemic-related restrictions drove a strong recovery in gifting around experiences (i.e., travel, dining out, live events) in 2022, and new surveys show the experiential interest continuing to build two years later.
The 2024 Deloitte holiday retail survey of over 4,000 U.S. consumers found that spending on experiences this holiday season is expected to climb 16% year-over-year to an average of $735. That compares to the pandemic low of $465 in 2020 and is easily above the $539 average in the pre-pandemic 2019 year.
With Deloitte citing increasing demand for “party apparel and decorations” to support those experiences, spending on non-gift categories is expected to increase 9% year-over-year to $507, up from only $389 on average in 2019. Meanwhile, spending on gifts is expected to be down 3% year-over-year to $536 and up only 4.9% above the 2019 level of $511.
Among other surveys:
- TD Bank’s 2024 Merry Money Survey of 2,000 U.S. shoppers found nearly half (45%) plan to gift experiences over physical items, with younger generations (Gen Z, 68%; millennials, 61%) leading the way. The trend is especially prominent among higher-income households, with 55% of individuals earning $100,000 or more choosing experiential gifts. Dining experiences topped the list at 53%.
- American Express’ Amex Trendex survey of over 13,000 global consumers found 38% planning to gift an experience for their significant other, with 32% planning to do the same for their children. The top experiential gifts were found to be entertainment (59%), travel (54%), and food and drink (49%). Between friends, 69% preferred “to share a fun experience or trip over a traditional exchange.”
- JLL’s 2024 Holiday Shopping Survey found a 56% uptick in spending on holiday-related experiences and a 60% hike in spending on holiday food and decorations versus only a 10% increase in planned spending on gifts, “signaling that shoppers are embracing more than just physical goods this season.”
A wide range of pre-pandemic surveys and studies identified a shift toward “memories over materialism,” especially with millennials and Gen Zers.
A 2019 survey of 3,200 consumers globally from advertising agency Momentum Worldwide found that, at the time, 76% of respondents would rather spend their money on experiences than on material items. Among the respondents, 58% wanted to be part of an experience to escape from everyday life, 70% wanted an experience where they could laugh and have fun, and 63% wanted to be part of an experience where they learned something new. Consumers identified “inspiration and meaning” as the most sought-after quality in brands, a 200% increase from 2012 for this particular set of attributes.
“We’ve traced this shift in sentiment to the macro changes society has experienced over the past seven years including the rise of stress, a lack of trust in institutions and a feeling of disconnect caused by technology,” said Elena Klau, global chief strategy & product officer at Momentum Worldwide, at the time.
Several university studies have likewise concluded that experiential purchases bring more satisfaction than material ones. Researchers from the McCombs School of Business at The University of Texas found that experiences endure in people’s memories, while the perceived value of material goods weakens over time. Amit Kumar, assistant professor of marketing at McCombs School of Business, said in a Medium column, “They live on in our memories and in the stories we tell other people.”
BrainTrust
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
Brandon Rael
Strategy & Operations Transformation Leader
Kenneth Leung
Retail and Customer Experience Expert
Recent Discussions
Discussion Questions
What’s driving the growing appeal of giving experiential holiday gifts instead of material ones?
Is this trend more of a threat or an opportunity for brands and retailers?
Poll
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The rise in gifting experiences isn’t new; it has been in play since well before the pandemic. It’s partly a function of a saturated consumer, with most people having a lot of the things they need and want – which makes it difficult to know what to buy. It is also partly related to a greater emotional need to connect with family and friends, which means doing things and creating memories is seen as more valuable than simply getting more ‘stuff’.
You’re not wrong but I also believe we need to factor in the prevalence of social media. Folks are inundated with influencers discussing wealth, showcasing travel or playfully capturing experiences that most of us never considered. Enough exposure to these types of messages and it is bound to pique discussion, curiosity and action. What would be really interesting is a deeper dive on the source of these experience gifts. Does this provide or disprove my hypothesis?
Gifting material items is becoming increasingly difficult if you don’t know what they want and what they’ve already got, or if the gifts might be duplicates.
Additionally, it is awkward to give someone a gift that they want to return.
It is easy to gift experiences, such as restaurants, travel, entertainment, etc., and it is especially effective if it is choice-flexible.
There will be a small hit to “holiday sales” with this growing trend, but other industries will flourish.
Consumer confidence is showing some early signs of recovery for the first time in a long time, and with the pandemic quickly becoming a distant memory, people are more willing to share and receive experiences outside of their homes.
Social media has driven people to prefer experiences over things. Luxury goods have been a staple on social media but as counterfeits and the likes of ballerbusters expose the fake luxury goods and lifestyle influencers, travel and experience (sometimes staged and exaggerated) still draws eyeballs and lead people to want to go to experience what they see on social media.
Consumers are prioritizing experiences over products this holiday season.
There are signs that the U.S. consumer is still spending, especially on experiences. But stubbornly high prices are squeezing lower-income consumers, pressuring everyday purchases and corporate profits.
- Airlines and hotels expect a strong travel season, particularly for international destinations. Morgan Stanley’s Michael Wilson notes that “one-third of consumers prioritize travel over other discretionary purchases and services.”
- Cruise lines are seeing record bookings, even as prices have soared. Passengers are also spending freely onboard the ships despite having to pay significantly more for food and drinks
- Concerts, too, are still hot tickets even at sky-high prices — with Live Nation saying that “global fan demand is stronger than ever.”
- But the picture is different when it comes to more discretionary items and everyday purchases, as consumers appear more tight-fisted due to economic headwinds like elevated food costs, rising mortgage rates, and fewer government rebates
Ultimately, as companies face more pricing pressure, they will likely have to rely on other cost cuts or effective cost management to help preserve their profit margins in the coming quarters.
We should expect companies also to determine and define paths to profitability. This includes initiating transformation initiatives, driving restructuring plans, de-investing in non-value-generating services, and investing in new technological capabilities to unlock value for their associates and improve the overall customer experience.
With experiential gifting on the rise, retailers may have an opportunity to engage with customers by offering experiences or partnerships. This could help brands create memorable moments that resonate with shoppers long after they leave the store.
More consumers are spending on services rather than products in part because the services are often social, shared experiences. There’s less risk that it’s the wrong size or color when you invest in quality time together.
Holiday gifts are meant to be thoughtful. And in a world where people can buy anything they want and have it delivered in a matter of days, it’s much harder to find gifts for others they haven’t already purchased. But spending time with someone is a differentiator. You can’t purchase two hours with your best friend at Target. Amazon doesn’t sell movie nights with your sister. Even in the market of experiences, who consumers experience them with is something outside of the seller’s control and unique to the gift giver.
However, this trend is more of an opportunity than a threat to brands and retailers willing to think outside the box. Experiences need sponsors. People will often buy mementos to remember their experiences.
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The rise in gifting experiences isn’t new; it has been in play since well before the pandemic. It’s partly a function of a saturated consumer, with most people having a lot of the things they need and want – which makes it difficult to know what to buy. It is also partly related to a greater emotional need to connect with family and friends, which means doing things and creating memories is seen as more valuable than simply getting more ‘stuff’.
You’re not wrong but I also believe we need to factor in the prevalence of social media. Folks are inundated with influencers discussing wealth, showcasing travel or playfully capturing experiences that most of us never considered. Enough exposure to these types of messages and it is bound to pique discussion, curiosity and action. What would be really interesting is a deeper dive on the source of these experience gifts. Does this provide or disprove my hypothesis?
Gifting material items is becoming increasingly difficult if you don’t know what they want and what they’ve already got, or if the gifts might be duplicates.
Additionally, it is awkward to give someone a gift that they want to return.
It is easy to gift experiences, such as restaurants, travel, entertainment, etc., and it is especially effective if it is choice-flexible.
There will be a small hit to “holiday sales” with this growing trend, but other industries will flourish.
Consumer confidence is showing some early signs of recovery for the first time in a long time, and with the pandemic quickly becoming a distant memory, people are more willing to share and receive experiences outside of their homes.
Social media has driven people to prefer experiences over things. Luxury goods have been a staple on social media but as counterfeits and the likes of ballerbusters expose the fake luxury goods and lifestyle influencers, travel and experience (sometimes staged and exaggerated) still draws eyeballs and lead people to want to go to experience what they see on social media.
Consumers are prioritizing experiences over products this holiday season.
There are signs that the U.S. consumer is still spending, especially on experiences. But stubbornly high prices are squeezing lower-income consumers, pressuring everyday purchases and corporate profits.
Ultimately, as companies face more pricing pressure, they will likely have to rely on other cost cuts or effective cost management to help preserve their profit margins in the coming quarters.
We should expect companies also to determine and define paths to profitability. This includes initiating transformation initiatives, driving restructuring plans, de-investing in non-value-generating services, and investing in new technological capabilities to unlock value for their associates and improve the overall customer experience.
With experiential gifting on the rise, retailers may have an opportunity to engage with customers by offering experiences or partnerships. This could help brands create memorable moments that resonate with shoppers long after they leave the store.
More consumers are spending on services rather than products in part because the services are often social, shared experiences. There’s less risk that it’s the wrong size or color when you invest in quality time together.
Holiday gifts are meant to be thoughtful. And in a world where people can buy anything they want and have it delivered in a matter of days, it’s much harder to find gifts for others they haven’t already purchased. But spending time with someone is a differentiator. You can’t purchase two hours with your best friend at Target. Amazon doesn’t sell movie nights with your sister. Even in the market of experiences, who consumers experience them with is something outside of the seller’s control and unique to the gift giver.
However, this trend is more of an opportunity than a threat to brands and retailers willing to think outside the box. Experiences need sponsors. People will often buy mementos to remember their experiences.