Principal® Reports Consumers Spending Less, Shopping Differently in an Uncertain Year

Rhea-AI Summary

Research from Principal Financial Group reveals heightened stress levels and reduced holiday spending among U.S. consumers as they face COVID-19's economic impact. Over 10% of consumers plan to skip shopping, with financial strain (29%) and unemployment (15%) being significant factors. Those shopping intend to cut back, with over 70% planning to do so online. Stress related to holiday expenses has risen 14% compared to 2019, with food and home improvement spending increasing. For 2021, major financial resolutions include saving more (42%) and reducing spending (40%).

Positive

• Increased focus on saving more (42%) and reducing spending (40%) for 2021.
• Shift towards online shopping, with over 70% of consumers planning to shop online.

Negative

• Over 10% of consumers not planning to shop this holiday season.
• Financial strain reported by 29% of consumers, impacting spending habits.
• 14% increase in consumer stress regarding holiday expenses compared to 2019.

Research from Principal Financial Group^® released today indicates higher stress levels and less holiday spending among U.S. consumers as many continue to navigate the economic impacts of COVID-19. For those who are planning to spend, a majority will do so online and are decreasing expenses on travel, dining out, and entertainment.

“2020 was a challenging year for many individuals, families, and businesses, and it’s not surprising that many are having to change their typical holiday spending habits,” said Sri Reddy, senior vice president, Retirement and Income Solutions at Principal^®. “While it can be difficult to cut back, particularly during this time of year, less spending today can help make 2021 less financially stressful and support a more secure, long-term financial future.”

For the past three years, Principal has taken a pulse of the general consumer market just prior to the holiday season to understand sentiment and outlook, as well as overall holiday spending plans. This year, COVID-19 related questions were added to learn about the direct impact on shopping intentions.

Key 2020 survey findings

• More than 10% of consumers are not planning to shop this holiday season. Consumers cite several pandemic-related factors influencing holiday shopping decisions, including financial strain (29%), unemployment and less pay (15%), and general COVID-19 concerns (14%).
• Of those who do plan to shop, they say they’ll spend less than previous years and will shop differently. More than 70% will do so via online shopping. Both employed and unemployed consumers plan to spend less.
• More consumers are reporting high levels of stress related to holiday expenses compared to historic trends. The number of consumers who have a great deal of stress or are moderately stressed increased by 14% when compared to 2019. Those who are unemployed are most stressed, while those who are retired are least stressed.
• During this holiday season, consumers increased spending for food/groceries and home improvements in lieu of travel, entertainment, gas, and dining out.

Consumers share 2021 financial plans

Financial resolutions for next year are similar to 2020 goals, with top priorities being saving more each month (42%), reducing spending (40%), and paying off credit card debt (30%). Those with kids or those with incomes greater than $50k were significantly more likely to develop resolutions. Those 55+ were least likely to make a resolution (26%).

Heading into the new year, consumers are less concerned about gas prices, immigration, terrorism, health care changes, and personal data breaches than previous years. Instead, top consumer concerns include politics (47%), staying healthy (43%), economic uncertainty (42%), and food prices (40%) in 2021.

“As we approach 2021, we’ll continue to work with customers to build on past financial decisions and help them feel more secure and confident in those that are ahead,” said Reddy.

Access the full report here.

The Holiday Spending & 2021 Financial Outlook Methodology

The Holiday Spending & 2021 Financial Outlook results come from an online CARAVAN survey of 1,003 U.S. consumers over the age of 18. The survey was conducted by Engine Insights from October 21 - 23, 2020. Completed interviews are weighted by 5 variables: age, gender, geographic region, race, and education to ensure reliable and accurate representation of the total U.S. population (18 years of age and older). Each respondent is assigned a single weight derived from the relationship between the actual proportion of the population based on U.S. Census data with a specific combination of the 5 variables listed above. All sample surveys and polls may be subject to multiple sources of error including but limited to sampling error, coverage error, error associated with nonresponses, error associated with question wording and response options, and post-survey weighting and adjustments.

About Principal^®

Principal helps people and companies around the world build, protect, and advance their financial well-being through retirement, insurance, and asset management solutions that fit their lives. Our employees are passionate about helping clients of all income and portfolio sizes achieve their goals—offering innovative ideas, investment expertise, and real-life solutions to make financial progress possible. To find out more, visit us at principal.com.

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., 800-247-1737, member SIPC and/or independent broker-dealers. Principal National, Principal Life, Principal Funds Distributor, Inc. and Principal Securities are members of the Principal Financial Group^®, Des Moines, Iowa 50392.

Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

© 2020 Principal Financial Services, Inc.

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FAQ

What were the main findings of the Principal Financial Group's holiday spending survey?

The survey found increased stress and reduced holiday spending among U.S. consumers, with over 10% not planning to shop due to financial strain and COVID-19 concerns.

How are U.S. consumers planning to change their shopping habits during the holidays?

U.S. consumers plan to shop less and more than 70% will shop online, focusing on essential spending like food and home improvements.

What are the top financial resolutions for 2021 according to Principal Financial Group?

The top financial resolutions include saving more each month (42%), reducing spending (40%), and paying off credit card debt (30%).

How has consumer stress changed compared to previous years?

Consumer stress related to holiday expenses has increased by 14% compared to 2019, with the unemployed feeling the most stressed.