Elections and hurricanes will affect retail spending.

Inflation may have cooled, but retailers still face a holiday season filled with uncertainty.

Several factors difficult to predict will influence consumer spending as they grace the aisles and search for the perfect gift. Volatile weather, electoral distractions and a deal-seeking mentality may shape the season. And fewer days between Thanksgiving and Christmas than last year will put buyers on the clock.

Still, there is reason for optimism among retailers: Shoppers are feeling more optimistic and planning to spend more compared to last holiday season, according to an annual survey from consulting firm Deloitte and a separate forecast from the National Retail Federation.

Holiday spending in November and December is expected to increase between 2.5% and 3.5% compared to 2023 and range between $979.5 billion and $989 billion, according to the National Retail Federation. This is a more modest increase than the 3.9% year-over-year jump recorded between the 2022 and 2023 holiday seasons, when spending totaled $955.6 billion. The NRF figure excludes car dealerships, gas stations and restaurants.

Shoppers expect to spend an average of $1,778 on the holidays this year, 8% more than last season, according to the survey by consulting firm Deloitte. The survey, which included about 4,000 consumers and was conducted in late August and early September, attributed the increase in spending to a more favorable economic outlook, a perception among respondents that prices would be higher and greater willingness to spend among higher-income households with annual incomes between $100,000 and $199,000.

Low unemployment, a return to more typical inflation levels and a recent interest rate cut by the Federal Reserve are lifting consumer spirits, said Stephen Rogers, managing director of Deloitte's Consumer Industry Center.

“People are still in a better mood, despite the political rumors,” he said. “When they look at their bank account and think about where they stand financially, they feel better.”

Weeks before trick-or-treating, shoppers sampled their first holiday offerings.

Those early deals set the stage for a season in which buyers are expected to look for more ways to stretch their budgets after living costs have risen for years.

Nearly 80% of buyers surveyed by Deloitte said they would participate in sale events in October and November, up from 61% last year.

“Our search for deals has really been exercised over the last two years and we're going to continue to exercise it,” Rogers said.

Matt Shay, executive director of NRF, echoed that prediction. In a call with reporters this week, he said the retail group expects a more promotional environment this holiday season, with deals on more brands and categories than a year ago.

Another potential challenge for retailers? Catering to customers who focus more on decorations and experiences than gifts. According to Deloitte's survey, consumers plan to spend 16% more year-over-year on experiences, but spend 3% less on gifts compared to the previous year's Christmas period. Purchases other than gifts, including spending on Party decorations and clothing are also expected to increase 9% year over year.

The company's survey found that spending across retail categories would remain relatively stable with an average of $1,043 in 2024 compared to $1,020 in 2023. Consumers across income groups reported value-seeking habits, including fewer self-gifts , more trading with affordable retailers and more looking for private labels or “duplicates” of more expensive items.

That change could hurt retailers who sell products unless they find compelling ways to tie their products to experiences, such as suggesting walking equipment, Rogers said.

For house depositwhich sells a wide range of Christmas decoration, including Santa-themed cushions and a giant animated reindeer for the garden, the high demand for decoration could be an opportunity. However, the home improvement retailer said it is prepared for consumers to also look for value.

This holiday season, Home Depot bought more low-priced artificial Christmas trees, such as a pre-lit tree that sells for $49, said Lance Allen, senior Christmas decorations merchandiser for the home improvement retailer.

As Americans wait for the results of the presidential election, will they also be shopping for the holidays?

That's a question on the minds of retailers and consumer brands, including Walmart and SharkNinjaThey hope shoppers will browse and buy instead of staying glued to the news. The election will be held on Nov. 5 and it could be days before a winner is known if the race between Vice President Kamala Harris and former President Donald Trump ends up as close as polls suggest.

SharkNinja CEO Mark Barrocas described the election as the “biggest unknown” that will shape the holiday season.

“It may be a blip or it may be nothing, and it can throw things off for a few weeks if the news cycle is all-consuming,” he said. “Christmas is coming and there will be a holiday season. It's just a matter of how many distractions there are.”

He said the election and the news cycle surrounding it can also influence how consumers feel about the economy.

Walmart's internal research suggests “an increase in positivity” as its shoppers Enjoy the fall and get ready for Halloween, said Jen Acerra, vice president of strategy and customer insights at Walmart.

“The only thing that's still there and moving is what's going to happen with the election, and what happens with the election is really going to determine whether this is something that stays positive or not,” he said.

Some companies have already blamed the elections for reducing their sales. Amazon attributed a weak forecast in August to an electoral distraction that would dampen demand for online shopping, a comment that some mocked as an excuse.

Delta AirlinesCEO Ed Bastian said in an interview with CNBC this month that the company expects lower demand before and after the election to impact the airline's revenue.

“I think consumers will take a little pause when making investment decisions, whether they're discretionary or otherwise,” he said. “I think you'll hear other industries talking about that, too.”

For retailers, cooler, wintry weather is always on the Christmas wish list.

The weather can put shoppers in the holiday spirit and put them in the mood to buy thicker sweaters, coats and gifts, said Evan Gold, executive vice president of Planalytics, a Philadelphia-based company that advises retailers on related inventory planning. with the weather.

“There is no external factor that influences consumer purchases as directly, frequently and immediately as the weather,” he said.

This year, the beginning of fall got off to a rougher start. The now unofficial start of the holiday shopping season marked by October sales events coincided with unusually warm temperatures in San Francisco and other parts of the country, and strong hurricanes that hit North Carolina and Florida. That makes shoppers less likely to want to buy sweaters, coats and artificial trees.

However, this year's weather should eventually help retailers, Gold said, as November and December temperatures are expected to be colder than a year ago. He said a change in weather, such as a dusting of snow or a cold snap, can help shoppers prepare for the season.

Many families will simply try to rebuild from hurricane damage rather than buy holiday gifts, which could redirect money toward furniture, clothing or home repairs, Jack Kleinhenz, NRF chief economist, said in a call with journalists.

“It will just be an adjustment in their budget on what they will spend, but it's really too early to know the full impact on retail,” he said.

Home Depot hopes that too. It pulled holiday products from 124 of its big-box stores to make room for items that hardest-hit areas need, such as shingles and drywall, Allen said. Instead, he said, he plans to sell a more limited variety in those stores of items like wreaths and his best-selling trees.

“They are trying to rebuild and get their homes back,” he said. “So obviously they're not going to buy a nine-foot reindeer and post it.”

Thanks to the calendar, the Christmas rush can be in full swing.

Shoppers will have five fewer days between Thanksgiving and Christmas this year compared to last year, which could reduce spending or potentially encourage time-pressed shoppers to look for expedited shipping, curbside pickup or other faster options to receive gifts.

The pressure will be on retailers to make the most of each day and offer convenience, as shoppers rush to get what they need and expect items to arrive within a few hours or, at the very least, a few days, said Shay of the NRF.

“A shorter period has consequences and implications and one of them, of course, is that the shipping season will be shorter,” he said.

On a recent tour of stores, Kohl's chief marketing officer Christie Raymond said the retailer expects to have to work harder to attract customers, especially low- and middle-income shoppers, who have felt pressured by the cumulative effect of inflation and without time.

“We think they feel more pressure than last year,” Raymond said. And he added that buyers have also said they “feel short on time.”

To attract those consumers, Kohl's wants to carry more of what they need, said Nick Jones, director of merchandising and digital.

The retailer has increased its gift offerings, added more party dresses and started selling a wider range of decorations, including Christmas trees, lawn ornaments and wrapping paper.

“We want to be a vacation destination,” he said. “We don't have the food, but we have everything else.”