People are prioritizing experiences over gifts this holiday season

People want something different this holiday season.

A recent survey shows consumers are placing greater importance on experiences than traditional gift-giving. They’re voting with their wallet, allocating 55% of their holiday budget to gifts, while putting the rest of it towards food and décor (22%) and entertainment and immersive experiences (23%), according to JLL’s 2023 Retail Holiday Survey.

Over 90% of respondents said they would partake in at least one holiday-related experience, such as taking the kids to visit Santa, an increase from previous years.

Consumers are not limiting themselves to one entertainment activity either. Over 60% of shoppers plan to participate in two or more holiday experiences. This is especially true of wealthy consumers – 76.3% of whom will enjoy multiple holiday-related experiences.

Planned spending on physical goods – gifts and other holiday merchandise – is down some 13.8% from 2022, decreasing from an average of $868 per person last year to $748 per person this year.

"It's fascinating to observe the consumer shift towards experiences during the holiday season," says Keisha Virtue, a retail senior analyst at JLL. "Across the board, there's a higher demand for dining out and attending movies, resulting in nearly double the spending compared to last year. This emphasizes a strong desire for immersive experiences that transcend material possessions."

How retailers are reacting

Retailers are aiming to capitalize on the shift. In-store experiences like visiting Santa and viewing holiday decorations have been high in demand during recent holiday seasons. Retailers creating memorable experiences that go beyond shopping have benefited from the increased attention and footfall.

A festive ambiance in stores plays a pivotal role in enhancing the overall shopping experience. Shoppers value the joyful atmosphere created by twinkling lights, thematic decorations, and the presence of Santa Claus. In fact, last year's report unveiled that 36.9% of holiday shoppers derived enjoyment from the holiday ambiance in physical stores, finding pleasure in the festive decor and delightful scents. Holiday ambiance and being able to interact with products in person remain top priorities for in-store shoppers.

Consumers who prioritize enjoying the shopping experience are significantly more likely to shop at malls, according to the report. Young shoppers also will flock to the mall this holiday. Almost half (49.6%) of primarily Gen Z shoppers (aged 18-29) will shop in malls compared to the 40.8% average.

"By providing facilities, gift wrapping services, and engaging activities, retailers can offer the enjoyable experiences shoppers desire," says Virtue. "Incorporating giveaways and hosting events within malls can also make a substantial difference in attracting customers and enhancing the overall shopping experience."

This often involves live performances, holiday-themed dining experiences, or even pop-up markets, Virtue says. "By offering a variety of activities and engaging features, retailers can generate excitement and exclusivity that entices shoppers to visit their stores."

Retail technology in demand

Technology also occupies a pivotal role in enhancing the shopping experience. Augmented reality and virtual reality applications, for instance, can be seamlessly integrated to offer interactive and immersive experiences within physical stores. Retailers can utilize these digital experiences to foster an emotional connection with shoppers, setting themselves apart from their online counterparts.

While the shift towards experiential shopping may seem daunting for traditional retailers, it presents a remarkable opportunity for growth and engagement.

"This growing preference for experiences underscores consumers' increasing desire to create lasting memories and engage in holiday-themed activities," says Virtue. "As individuals eagerly anticipate enjoying the festive season, the role of physical stores, online platforms, and entertainment offerings will play a crucial part in meeting their evolving needs."