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Consumers Primed to Purchase Big-Ticket Items in Coming Months
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While the coronavirus pandemic has changed the way people shop, U.S. shoppers appear willing to throw down some bucks — particularly for larger purchases — in the near future.
A report from TD Bank finds that the average amount doled out on major purchases so far in 2021 ($1,854) decreased slightly from 2019 ($1,884). But 70% of consumers say they’re likely to spend on a big-ticket item (anything that costs $500 or more) in the next six months, so that average could rise.
Millennials more likely to spend on major purchases
Among those surveyed, millennials (ages 23 to 38) are the spending pacesetters, with 80% saying they plan to make a major purchase in the next six months.
They’re also out-purchasing other age groups, making an average of 3.7 big-ticket purchases a year, compared to:
- Gen Zers (ages 18 to 22) — 2.4 major purchases a year
- Gen Xers (ages 39 to 54) — 3.1
- Baby boomers (ages 55 to 72) — 2.2
- Members of the silent generation (ages 73 and older) — 2.5
Interestingly, Gen Z’s shopping habits mirror older generations more than younger ones. They’re more likely than any other age group to make a major purchase at a brick-and-mortar store, with help from retailer financing. Plus, the purchases are sparked by a life milestone event — a new job, anniversary, graduation or a first apartment, for example.
Consumers spend more with store-branded credit cards
According to the TD Bank report, shoppers with retail credit cards are more inclined to make large purchases and spend more. Among survey participants, nearly half (46%) who carry store-branded credit cards have at least three such cards. More than 6 in 10 (61%) respondents say the top perk is additional discounts on purchases, while 37% cite financing options.
So where is their money going? In the past year, 43% of consumers made at least one major purchase on electronics and music equipment, followed by:
- Appliances (39%)
- Furniture (35%)
- Home improvement items (35%)
To make these big-ticket item purchases, consumers do tap into financing options. Among those surveyed, 39% say they are more inclined to shop with a retailer with no-cost or low-interest installment options.
In fact, 1 in 5 applied for some sort of retail financing with their last major purchase, and 3 in 4 say their ability to get financing influenced how much they wanted to spend.
Consumers want various financing options
This holiday season, nearly half of U.S. consumers (46%) say they’re more inclined to purchase from retailers that offer different financing options, from credit cards to installment loans.
If you’re planning on going big this holiday season on gifts, stick to a budget to avoid debt and set alerts to monitor your spending, whether that’s with a retailer credit card or cashback credit card.
Another way to curb your spending is to do most of your holiday gift shopping from a couple of retailers you love, making the most out of promotions and discounts.
Methodology: TD Bank commissioned Maru Public Opinion to field a survey of 1,001 U.S. adults ages 18 and older who made a major purchase ($500+) in the past 12 months, conducted Sept. 3-10, 2021.