Retailer Daily

Consumers Cautiously Approach Holiday Spending

U.S. consumers are more optimistic this holiday season than last, but are still making their holiday spending plans with caution and frugality in mind. These are some of the key findings from research firm Deloitte’s 24th Annual Holiday Survey of retail spending and trends. More than half of respondents, 54%, believe the economy will improve in 2010, compared with 28% who thought the economy was heading for improvement last year. In addition, 51% of respondents plan to spend the same or more on the holidays this year, compared to 41% last year. Notably, 2009 holiday spending trends show that gift purchases will drop while other holiday-related purchases will rise. Consumers plan to spend an average of $452 on gifts this year, down 15% from $532 in 2008. However, consumers plan to spend an average of $1,145 on non-gift holiday spending such as socializing away from home and decorations, up 16% from approximately $985 in 2008. Despite rising economic optimism, 66% of consumers still plan to shop differently this holiday season, with 74% intending to buy items on sale, 57% planning to buy lower-priced items, and 54% planning to use store coupons. Not surprisingly, discount stores were the most popular holiday shopping destination, favored by 59% of consumers. Following discount stores in popularity were online retailing (42%), the combined electronics, office supply and computer store category (26%), and department stores (23%). In a sign of the times, 19% of consumers plan to use their mobile phones while shopping to find store locations, obtain coupons and sales information, and research products and prices. This percentage rose to 39% in the 18 to 29 age group. The findings of the Annual Holiday Survey dovetail with 2009 holiday spending predictions made by the Deloitte Retail Group last month. Deloitte expects total 2009 holiday sales to register a 0% change from last year, excluding motor vehicles and gasoline, remaining flat at $810 billion from November 2009 – January 2010. This would be an improvement from what Deloitte tracked as last season’s 2.4% decrease, the first decline in holiday sales according to Deloitte’s analysis of Commerce Department data dating back to 1967. That prediction also singled out mobile applications and social networks as new means for retailers to pursue targeted advertising, build brand loyalty and measure campaign effectiveness. A number of other organizations have released 2009 holiday spending forecasts with results ranging from pessimistic to mildly hopeful. Despite measuring a 15% increase in the percentage of consumers planning to spend less this holiday season, market research firm The NPD Group still predicts a 0.5-1.5% increase in 2009 holiday spending compared to 2008. The National Retail Federation (NRF) recently released two primarily negative holiday forecasts. According to the Holiday Consumer Intentions and Actions Survey, in 2008, U.S. consumers spent an average of $705.01 on holiday-related shopping. This year, the NRF expects that average figure to drop to $682.74. The NRF's negative Holiday Consumer Intentions and Actions Survey follows its recent negative 2009 holiday forecast projecting holiday retail industry sales to decline 1% this year, from $441.97 billion to $437.6 billion. Other recent holiday forecasts offer mixed predictions for how retail will fare this holiday season. According to the Holiday Forecast from comparison shopping site PriceGrabber.com, 53% of consumers expect to spend less on holiday shopping this year than last year. This is an improvement from 2008, when 71% of consumers expected to decrease their annual holiday spending. According to a recent survey from The Nielsen Company, the 2009 holiday season should deliver virtually flatsales results. The survey indicates 44% of consumer households will spend the same on the 2009 holidays as they did in 2008, with 42% planning to spend less and only 4% planning to spend more. Retail Forward also expects flat holiday growth in all retail channels except automotive, food, and drug. In one positive sign for retailers, the most recent American Express Spending and Saving Tracker Update indicates 80% of overall respondents intend to make end-of-year holiday gift purchases, with 22% planning to start in October, 30% planning to start in November and 28% planning to start in December. The Annual Holiday Survey was commissioned by Deloitte and conducted online by an independent research company between September 24 and October 2, 2009. The survey polled a sample of 10,878 consumers and has a margin of error for the entire sample of plus or minus one percentage point.