While many Americans say they intend to spend less during this year's holiday season, spending on gifts is expected to hold steady and the number of gifts consumers plan to give is up compared with 2006, according to the 22nd Annual Holiday Survey of retail spending and trends, commissioned by Deloitte.
The survey shows that four in 10 consumers (41 percent) expect to reduce their spending this holiday season. Areas where spending is likely to be down include home improvements, socializing/entertaining, charitable donations, home/holiday furnishings and non-gift clothing. However, consumers said they plan to spend about the same on gifts as they did last year, and they expect to buy more of them — an average of 23, up from 22 last year and the highest over the last six years. Women plan to buy even more, with an average of 26 gifts.
"American consumers are resilient, and clearly they are in a giving mood this year," says Stacy Janiak, Deloitte's U.S. Retail Leader. "They may be more restrained in their general holiday spending and their personal indulgences, but they are determined to maintain the spirit and generosity of the holidays."
Anxiety about the economy is weighing on consumers. Only 57 percent of those surveyed say the economy will improve or remain the same next year. But the majority (85 percent) say they feel secure about their jobs, which is about even with last year.
Surprisingly, the recent credit crunch was not cited as a primary reason for spending less this year. Lower income households were more likely to cite higher food and fuel costs as the reasons for spending less this year, while those at higher income levels were more likely to cite volatility in the stock market and declining home values.
Older consumers — those aged 61-74 — plan to spend 27 percent more than the average consumer. The group traditionally has reported higher holiday spending.
Department stores — both traditional and discount — continue to be the top shopping destination, reflecting a continued time-pressured consumer, a need for convenience, and a long-term trend of fewer shopping trips and fewer stores visited.
Gift Cards Tops for Fourth Straight Year
For the fourth straight year, gift cards are expected to be the top gift purchase, with more than two-thirds (69 percent) of consumers surveyed planning to buy them, compared with 66 percent last year. In addition, holiday shoppers are planning to buy even more cards this year: an average of 5.5 cards, compared with the 4.6 cards they planned to buy last year. One in six consumers (16 percent) plan to buy 10 or more cards, compared with 11 percent last year. Consumers are also spending more in total on gift cards and more per card: $36.25 per card on average compared with $30.22 last year.
"Again, convenience is key," says Janiak. "A gift card to a store that the recipient enjoys is a thoughtful gift that accommodates Americans? limited time to shop. As gift cards continue to grow in popularity, retailers need to be even more creative in their redemption programs, so that they can quickly recognize the dollars in their revenues and potentially capture additional spend beyond the value of the card."
Gift Buyers Concerned about Imports
In the wake of recent product recalls, consumers are increasingly concerned about the safety of imported products, with those over age 44 being most concerned. More than half of consumers surveyed (54 percent) say a product's country of origin is important to them when making a purchase decision. More than one-third of consumers (35 percent) said they are concerned about the safety of imported non-food products. Almost six in 10 (58 percent) say the recent news stories about product recalls will influence some of their purchase decisions this holiday season.
"The recent product recalls present a potential opportunity for savvy retailers," says Janiak. "Beyond inventory that is 'Made in America,' increased product testing and enhanced communications with consumers can build retailers' brands and improve trust among consumers.?