Dive Brief:

• Holiday spending should see its best days since the Great Recession, growing 10% from last year to an average spend of $1,121 per shopper, according to PricewaterhouseCoopers' 2016 Holiday Outlook.

• PwC anticipates that the growth will be driven by households with annual incomes lower than $50,000, whose spending could rise 23% compared to higher-income households' 4% boost.

• Busy millennials, many of whom are now full-time workers with children, are more optimistic about the economy, start their holiday shopping earlier than consumers overall and enjoy it more (75% versus 61% across other demographics), PwC said.

Dive Insight:

The PwC report paints a picture of a U.S. consumer ready to spend more this season — and even enjoy themselves doing so, despite their busy lives. “The great news for all retailers is consumers are much more optimistic this holiday season,” Steven Barr, PwC’s U.S. retail & consumer leader, said in a statement.

But much to the chagrin of brick-and-mortar retailers, many shoppers will opt for experience-oriented gifts like travel and entertainment over traditional merchandise, according to PwC. Digital sales are expected to increase 25% year over year.

The challenge for store-based retailers will be to use their brick-and-mortar status as an advantage to stay relevant, Barr said. But it will also be key for any retailer offer merchandise that can’t be found anywhere else, which is essential to attracting shoppers to stores (or on sites) and avoiding the pressure to drill prices down to the bottom. 

“Small, independent retailers and local artisans are expected to compete for consumers by offering personal service as well as unique and hand-made gifts,” Barr said. “And, the larger format retailers are expected to provide the services and value that matter most to shoppers — including knowledgeable store associates, speedy checkout options, well-stocked stores and great prices."