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.
#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.