Holiday shopping in Central KY this year might look a little different
It’s almost time to embrace the gift of giving, Central Kentucky.
But what that looks like this year might be a little different than in the past as tariffs impact prices on imported goods in stores and the labor market continues to cause strain on households.
Some two in five Americans feel financially insecure about affording the holidays this year, including affording to make large family meals, travel to visit relatives and purchasing gifts, according to a survey conducted by CouponFollow, a personal financial planning app.
Part of that strain is due to inflation, or the increase in the average price of goods, according to the survey.
The Consumer Price Index, a measure taken by the U.S. Bureau of Labor Statistics to indicate the average change in price over time, is up three percentage points year-over-year.
What would have been a $100 purchase in September 2024 was a $103 purchase in the same month this year.
But it’s not just inflation, said Evelyn Smith, an assistant professor of marketing research at the University of Kentucky’s Gatton College of Business and Economics.
“We are seeing that there are a lot of tariffs being added to products,” Smith said.
So far, evidence shows tariffs have raised retail prices by almost 5%, according to Harvard Business School’s Pricing Lab and Tariff Tracker in the Digital Data Design Institute.
Tariffs, imposed on a number of countries by President Donald Trump at the start of this year to in part encourage domestic manufacturing and reduce the country’s trade deficit, can change prices in two main ways.
The importer, or business that solicits a good, is responsible for paying a tax. That kind of tariff may not pass through to everyday consumers because a retail firm, big ones especially, might absorb some of the cost.
Indirectly however, tariffs trickle down to price tags when firms move to sourcing materials domestically, which is generally more expensive.
“But, I do want to point out that pricing is a very complex decision,” Smith said. “It’s not just simply cost, it’s largely impacted by competition … they (stores) have to consider all the risks, the uncertainty, the whole supply chain.”
Part of the competition, Smith said, is how stores create an experience for shoppers, which is starting earlier and earlier each year, she’s noticed. By the time Halloween rolled around, discount department stores similar to TJ Maxx had already put out their Christmas decorations.
Getting to one’s shopping list before temperatures even start to drop is typical, Smith said. But what’s changed is how shoppers interact with the experience once Thanksgiving has passed.
“So, in terms of shopping in person versus online, I think people are getting more tech savvy, it’s easier for them to compare prices now,” Smith said. “They bring their devices with them, and I do think that it’s possible that because of Covid, we shifted. … Now, we’re really shopping for an experience. You go into the store, you have the music, you have all the decorations. Stores are putting in more effort, having more fun, having some games, having people try food in person.”
Some of the best experiences around the Lexington area, Smith said, are at locally run stores where the stores are a bit smaller and the merchandise is often more niche.
But even frequent shoppers at some of Lexington’s finest stores aren’t immune from higher prices changing their habits going into the holiday season.
According to an economic impact survey conducted online in September by Nationwide, the insurance provider and financial planning company, about half of U.S. consumers are planning on buying fewer gifts in 2025 than they did during the holiday season last year.
More than a third are opting for cheaper gifts, according to the survey results. The strain on making large and multiple purchases has been happening for most of the year already — four in 10 people have delayed or canceled a major purchase already this year, the survey found.
“Even though many Americans say they feel financially stable today, the way they’re behaving tells a different story,” said Nationwide Chief Economist Kathy Bostjancic. “This year has seen a lot of mixed signals, with some improvement in wages on the one hand but weak job growth, continued inflationary pressures and geopolitical concerns on the other. As a result, consumers are proceeding with caution because they are unsure just how firm their financial footing will be in the near future.”
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