A PwC report has consumers planning to shop at specialty and local merchants this holiday season.

Consumers are expected to spend 6 percent more this holiday, with apparel and gift cards the projected top categories for gift giving and more purchases to be made at specialty and local merchants.

That’s according to a 2017 Holiday Outlook report from PwC. Rounding out the top five categories are toys, personal electronics and accessories. The average spend is expected to be $1,189, with $661 allocated to gifts, $336 for travel and $192 for entertainment. PwC this year conducted its usual annual survey, but added a special check on Gen Z consumers between ages 13 to 16 to use as a baseline for future reports.

It found almost 20 percent of consumers plan to use their smartphones to pay for in-store purchases, with 10 percent planning to pay via a wearable device such as a smartwatch. Not surprisingly, that percentage rose for the Gen Z group — they grew up with smartphones and wearable devices — where close to 30 percent plan to pay via a smartphone while in a store and nearly 15 percent stating they plan to pay using their smartwatch. Further, 80 percent of respondents said they support payment technology tools such as sensor fingerprinting, facial recognition, retinal scanning and voice control. They also said they are open to alternative currencies, such as Bitcoin. Helping the move to mobile payment technology are retail incentives — one cited by the report is the ability to order online and then “go to the front of the line for pickup.”

According to Steve Barr, U.S. retail and consumer sector leader at PwC, the interconnectedness is creating what he called a “community of commerce” where retailers are making it easier for consumers to balance convenience with price, speed and variety to determine which channel works best for them.

He noted that the physical store is gaining again in importance as more consumers said they plan to shop at “smaller specialty or independent retailers this holiday.” While that’s not necessarily good news for department store retailers, there are lessons they can learn from their specialty counterpart.

In the survey, respondents said they deplore long, slow-moving checkout lines and like the convenience of kiosks and special pickup counters for time-pressed shoppers during the holiday selling season. The younger consumers in particular prefer special on-site events — such as Shinola’s partnerships with rappers and tattoo artists — because they want a fun shopping experience.

According to Barr, “Department stores need to learn to curate a much more targeted experience toward the customers that are driving the greatest profitability for them. Retail has been slow to realize that not all sales are good sales….Retail has to learn that the best relationships are the profitable relationships.”

Another finding from the survey was that those who choose to give gift cards most often — at 65 percent — gave a restaurant gift card, followed at 61 percent by a branded retailer gift card other than Amazon and at 41 percent an Amazon gift card.

In a separate holiday study by RetailMeNot, the top categories were also apparel and shoes, electronics and toys. It saw growth in “experience” categories such as travel, food and entertainment. The RetailMeNot study found that half of shoppers said they are willing to wake up early during key shopping dates to snag deals available in a store. Further, it found that consumers respond best to limited-time offers, such as those lasting between three and five days.

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