In a media and analyst briefing earlier today, BIGresearch’s Phil Rist and I shared ten insights of what to expect this holiday season based largely on findings from NRF’s first holiday survey. Listen in on the complete briefing, or view the top 10 below:
#1: Americans aren’t ready to declare an end to the recession. According to a survey by BIGresearch, Americans will not believe the recession is over until they see a reduction in unemployment. So, while an increase in stock market activity might be great news for high-end retailers, it’s not helping retailers who cater to Middle America. As Phil explained on the call, “The Wall Street traders are excited but the average American isn’t in the pit. They’ll be looking at the job market to see when they should feel better.”
#2: It’s all about the economy. We’re hearing a lot about people making changes to gifts (more practical gifts, joint gifts, or making gifts) as well as putting up last year’s decorations. The economy will also impact where people shop, with 70% planning to head to discounters and 11% planning to buy something from a thrift store or resale shop. (We added the “thrift” category this year and, personally, I’m shocked that one in ten people are going to purchased a used gift this year. Not for me, please!)
In another sign of the times…is it possible that people will use gift cards they’ve previously received to make holiday purchases? We’ll find out next month when we add “gift card” to our annual holiday payment method survey.
Side note: One of the best ways to hear from shoppers’ themselves about what they are planning this holiday season is to watch the three-minute video conducted by EXPO for NRF.
#3: Sales and promotions are king. With 2009 the holiday season of the bargain hunter, more than half of people say that sales or everyday low prices will be the deciding factor on where they buy. But with inventories at a minimum, it will be interesting to watch the push-and-pull between retailers and customers. Retailers, who have scaled back on inventory, are telling consumers to shop early while consumers, who are used to waiting until the last minute for good deals, might plan to hold out for better sales. We’re expecting retailers to market heavily on the front end to entice shoppers into the stores but we’ll need to wait and see when customers finally start to bite.
#4: Pay attention to payment methods. Our November survey digs deeper into payment methods, and we’ll be paying close attention to how an increase in credit card minimums and also an increase in interest rates may impact spending. This is an expenditure that Americans don’t like, many can’t accommodate, and most weren’t expecting. But this move is another reason why many may shy away from credit cards and could bode well for retailers who offer layaway.
#5: It’s the thought that counts. Hallmark and friends, take a deep breath: greeting card spending won’t experience as dramatic of a drop as many other categories. Americans say they’ll spend 2% less on greeting cards this year (compared with 17% less on friends and 15% less on co-workers, for example). Turns out people might be just sending a card instead of a gift. Better get those stamps ready…
#6: ‘Tis the season to eat. Candy and food spending is up about $10 per person and was the only category that rose in the entire survey. “People may be giving gifts of pie or cookies instead of buying them something, or they might invite others over to the house for a get-together,” said Phil Rist.
#7: Gift cards aren’t dead. When asking people what they wanted to receive this year, gift cards were the only category that saw an increase. (Check out a recent blog post on the findings and some examples of retailer gift cards.) While people may worry that gift cards are impersonal or are trying to find merchandise on sale, gift cards remain the most asked-for item. There could be a few reasons behind this: My cynical side says that people may want to use gift cards they receive for the holiday season on necessities like gas, food or laundry detergent. The optimist in me wonders if people salivate over the idea of receiving gift cards because they’ve been pulling back on spending all year and love the idea of going into a store to buy something for themselves.
In tandem with trend #6 (it really is the holiday season of food), Phil also suggested that many people might want to receive gift cards for restaurants to enjoy dinner out with their family during a year when many have been pulling back on that experience.
#8: When looking at store sales, consider the Internet. The web will influence one in three holiday purchases this year, and retailers are using the Internet not only as a sales channel but also as a marketing vehicle. Take a look at Shop.org’s eHoliday survey, which provides more insight on how people will shop online this holiday season as well as what online retailers are planning. (Hello, social media!)
#9: Don’t discount department stores. Department stores are doing something right among the 18-24 year-old age group: young adults are more likely to shop at department stores than anywhere else during the holiday season. These retailers, which include Macy’s, JCPenney and Kohl’s, are also doing a nice job with private label products, positioning themselves as discounters (at least on price) and creating an environment where young adults like to shop. That said, keep in mind that young adults are the most likely to wait until the last minute to shop, meaning a large portion of department store sales might come in very close to Christmas Day.
#10: Impulse spending? Fuhgettaboutit. The number of people who plan to make additional, non-gift purchases for themselves or their family declined this year, and those who will make additional purchases will also spend less on them. As Phil reasoned, “It’s not in the budget this year for people to treat themselves, and some may feel a little guilty doing that,” he said. “Instead, they’re taking their holiday budget and focusing on people on their list.”
So, there’s our Top 10. I look forward to your comments on what we are missing.
6 Comments
Great list. I would also suggest adding alternative payments such as Bill Me Later and PayPal to #4. At least one luxury retailer of fine jewelry I’m aware of implemented a new consumer credit program that resulted in an increase of Average Order Values and 45,000 new customers in the October – December timeframe in 2008.
Details of this success story are here: http://www.litle.com/resources/success-stories/multichannel-retail
Regards,
Alex
I have been running a small Christmas gifts survey too and one of my questions looks at people’s attitudes to Kris Kringles. Different from a group gift where everyone chips in for a large present, this is one person gets one gift from someone (usually) randomly selected to do the gift-selecting. Do people think they’re thoughtless, OK in some circumstances or the best time- and money-saver ever? Will more families use Kris Kringles this year?
I am also asking what services people might want to buy or make use of on online retailers? Would they be likely to use gift suggestions, printed greeting cards and gift-wrapping services, or gift wishlists?
And is there an opportnity for retailers to capture that small but important group who shop for (Christmas, birthday, anniversary, wedding, baby etc) gifts all year long?
One area that I have found to be a great opportunity for saving money yet giving gifts that show value and are cherished by the reciever is in music. Retailers are desperate to save the declining physical CD business and are offering great pricing on packages that formally would retail at a much higher price. With the internet offering low pricing on downloads, it has driven the price of many physical CD packages down below the $10 barrier and make great gift opportunities. Multi CD offerings in special packaging such as tins or exclusive content not found on the internet is abundant at retail . Giving an actual CD with liner notes, packaging and special additions is a great gift item to recieve and at a low cost to the purchaser.
I just wanted to add a consumer perspective to this Holiday Season. My family and I are not making Christmas related purchases or traveling this year, as we had in years past. Our economic situation is one that requires we tighten our belts just to put food on the table. With that said, we had to purchase a new tire for our car to replace one that was worn through. You would think this wouldn’t be a big deal. We saved up a few weeks for it, and then went shopping to compare prices this week. I was so amazed. It’s a hostile environment out there! I was amazed to see that most of the retailers (both the big name discounters and our local repair shops) had their Holiday decorations put up. One even had Christmas music playing. At the smaller retailers and local repair shops we were virtually assaulted with sales pitches. One guy was so pushy we had to practically yell at him to get him to stop trying to get us to upgrade to a snow tire. It snows here maybe 8 inches total a year. Seriously, we don’t need a snow tire. And, it’s degrading to have to tell these people, “look, we can’t afford 1 tire let alone 4″. We ended up price checking at our local big discount store. Unfortunately, we had a question about sizes and there was no one to be found. The young man we did eventually track down didn’t know a bike tire from a car tire, so we let it go and left. We ended up posting an ad on craigslist asking if anyone had the size and type of tire we needed. About 15 minutes later we had 4 responses with 4 quotes. Less than an hour later we had a perfectly good tire from a man who owns a national “name brand” body shop in a city about 30 minutes north of us. We got a wonderful deal on the tire, all of our questions answered, and are very satisfied. He even put it on and balanced it for us free of charge.
The moral to this story is this: people don’t have money to spend this year, so your product better be good and your sales staff aloof but available at a moment’s notice…and they should know their stuff. Although we will not be shopping this year specifically for the Christmas Holiday, we will be shopping for necessities. Please tone down the cheer and sales pressure in the stores. It just makes our situation, and that of millions of other Americans, that much more depressing.
I am not surprised by the trend toward gift shopping at a thrift store. My guess is that the recipient will not be receiving a tired, worn out sweater. Rather, she may find herself the lucky beneficiary of the latest trend in the Indie craft world….creative folks are using thrift store finds as a basis to reuse, recycle and restore an object to give it a second life. An old sweater becomes a handbag, a pair of jeans becomes a pillow. A quick Google search of “reuse and recycle thrift store finds” turns up 445,000 hits.
I understand someone’s reluctancy to buy second-hand and give it as a give. But there are deals to be had like never-used Ferragamo shoes for $30.00. So, isn’t it just another way of submitting to the going-green campaign? Re-gift and recycle.
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