About 71 per cent of consumers in the US are planning to shop for cheaper alternatives into the holiday season, according to research undertaken for Square and Afterpay.

The research noted that 34 per cent of US consumers are planning to spend more for the holidays, and 71 per cent of merchants are expecting higher sales during the season.

“Neuroscientific studies reveal that ‘feel good’ chemicals such as oxytocin and endorphins are released when we enter the celebratory spirit,” said Shakaila Forbes-Bell, fashion psychologist at Afterpay.

“Consumers want to experience this earlier each year and are combining this desire for enjoyment with a savvier mindset; shopping with the intention for themselves and their loved ones, and gifting items that can stand the test of time.”

To engage with consumers, 51 per cent of merchants are using various omnichannel tactics such as hosting a curated holiday event while 39 per cent are offering special deals through loyalty programs.

Moreover, 23 per cent of sellers said they are considering using artificial intelligence to streamline their operations and marketing.

The majority of consumers are planning to complete their holiday shopping by November, with apparel and gift cards leading the list of preferred gift categories, followed by electronics and gadgets.

A total of 40 per cent of Americans said they would opt to pay using the Buy Now, Pay Later option while the preference to use credit cards for purchasing gifts decreases as consumers become more conscious about their finances for the holiday season.