After releasing our holiday forecast two weeks ago, we waited patiently to see if the findings from our first consumer survey would corroborate – or completely contradict – our economist’s analysis. Fortunately for us, the same conclusions can be drawn either way: the economy is still impacting shoppers, but there is reason for optimism.
We’re often asked by reporters, analysts and retailers: “What’s different this year? What should we expect?” Given our most recent survey data, it’s fair to say that – refreshingly – this holiday season is going to be very different than a year ago in a whole host of ways.
According to our first holiday survey, Americans plan to spend an average of $688.87 on holiday-related shopping, a slight rise from last year’s $681.83. But those numbers just tell a fraction of the story. Here are some of the most interesting trends and nuggets I found when digging through the full report of data, provided by our partners at BIGresearch.
#1: Americans [still] aren’t ready to declare an end to the recession. Sound familiar? Yes, this trend was resurrected from the 2009 vault and our predictions last year. Unfortunately, there’s been no magical turnaround in consumer sentiment, meaning the trend is still sticking around. According to the survey, 61.7% of holiday shoppers say the economy will impact their spending plans this year. (That is down from 65.3% last year, which is certainly a good sign.) While many people who say they’ll be impacted will simply spend less (81.5%), others will compensate by shopping for sales more often (54.1%), using coupons more frequently (40.6%) and comparison shopping online (30.9%). If the recession really is over, somebody might want to clue in the American shopper. They’re not buying it.
#2 …But there’s a glimmer of hope. Yes, Virginia, there are all sorts of reasons to be optimistic about the holiday season this year. (I’ll go into some of those specifics later on.) I’m not implying that there will be a huge return to the impulse buying and spending behaviors retailers saw in the mid-2000s – and there may never be – but the good news is the pendulum is swinging back, albeit slowly. Retailers may have a bit of breathing room this year to focus on factors other than price and promote items other than the basic necessities.
#3: Fundamentals are out. Fun is in. After Santa spent much of last holiday season doling out blue jeans and small appliances, Americans seem to imply that this year’s gifts will be a bit more…well, exciting. While gift cards and clothing will remain the most requested holiday items this year, the number of people putting jewelry on their wish lists this year is up 13 percent from a year ago (20.8% in ’09 vs. 23.0% in ’10). And more people are also asking for personal care or beauty items (17.1% in ’09 vs. 18.2% in ’10). Could this be the first signal of a return to discretionary spending?
You can almost hear a collective sigh of relief among retailers that they won’t have to spend the entire holiday season promoting $5 coffeemakers and $10 Crock Pots. Instead, expect shoppers to have more of an appetite for discretionary items or splurge-worthy gifts. To put it bluntly, if last year was the year to buy your wife a vacuum cleaner, this is the year to buy her a necklace. So, men, get shopping. (And someone please talk to my husband.)
#4: There’s still room for service with a smile. For the last nine years, we’ve been asking Americans which one factor is the most important when determining where to shop for the holiday season. It’s no surprise that, during a recession, sales or discounts and everyday low prices take the cake. It’s been fascinating to watch the results ebb and flow with the economy. While sales or price discounts are still chosen by the majority of survey respondents (41.8%) as the most important factor, that number dropped from last year’s all-time high of 43.3%. What’s taking its place on the list of priorities? According to the survey, customer service (at 5.3%, the highest percentage since we began the survey in 2002) and merchandise quality (12.7%). Of course I’m not saying that customer service and quality will trump sales by any stretch of the imagination, but they are becoming more important among many shoppers.
In fact, only one category has become less important over time: convenient location. Why? Chalk it up to the Internet. Store location isn’t as important when you can almost certainly find what you’re looking for online.
Here’s a good question for a water cooler conversation: Which age group is most likely to say that customer service is the primary factor when deciding where to shop? (I bet you guessed those in the 65+ age group, right? Wrong.) While older Americans place a primary emphasis on price, younger adults 18-24 are twice as likely as other adults (10.3%) to say that they’ll choose a store based on service. That’s further proof that this trend may not be disappearing anytime soon.
#5: Forget price. It’s all about value. Of course retailers know they need to focus on sales and promotions to bring in shoppers. And of course price is a factor for just about everyone. But unlike 2009 – and most definitely 2008 – price is not the only factor shoppers will consider when making buying decisions. We saw the same trend pan out during the back-to-school season and expect this trend to continue for the holidays.
Instead of solely focusing on price, shoppers are looking at the big picture. Does the digital photo frame that costs 20% more hold twice as many pictures? Is the sweater made from cashmere versus polyester so much softer that it’s “worth it?” Will the pre-lit artificial Christmas tree save so much hassle and headache compared with the unlit version that the two hours saved each holiday season will more than make up for the $40 difference in price? Those are all questions that this year’s shoppers are asking, and that’s all part of the value equation.
#6: Kids today are a walking contradiction. I realize I’m starting to sound like my grandparents, but the Gen Y contingent is a tough group to figure out. They’re not shopping early (27.7% will start before Halloween compared with 37.2% of all adults), but they’ve got an ambitious list of the stores where they want to make purchases: they’re more likely than average adults to buy at department stores, clothing stores, electronics stores…basically, when this group decides to actually start shopping, they’re really planning to hit the pavement.
What else makes the young adult crowd stand out? They’re spending pennies on the holiday season compared to other adults ($469.32 for young adults 18-24 vs. $688.87 average) but they’re among the first to head out and make “non-gift” purchases for themselves (69.4% of young adults vs. 57.1% average). More than half say the economy will impact their spending (57.6%) but they’re also twice as likely as other adults (10.3% vs. 5.3%) to say that customer service is the most important factor when making a purchase.
I give up.
#7: It’s all about me. Again. The number of people who will take advantage of holiday sales to make non-gift purchases for themselves is up eight percent this year (52.9% in ’09 vs. 57.1% this year), and the average person will spend about $108 on these “just for me” purchases. Of course some of this could be explained simply by pent-up demand, but many Americans might be able to find wiggle room in the budget to splurge on something for themselves or make an impulse buy on a great deal. In fact, some retailers may want to consider a return to the “one for you, two for me” marketing rhetoric so popular in 2006 and 2007.
Who’s most likely to spend on themselves? Men (58.2%), young adults 25-34 (70.5%), and Southerners (58.6%).
#8: Men are from Mars. Women are from Venus. It’s always interesting to see the difference between men’s and women’s shopping habits. I’m sure it comes as no surprise to those of us in retail that far fewer men will start their holiday shopping before Halloween (32% of men, 42% of women) and that men are more likely to request consumer electronics (39.7%) or sporting goods (25.8%) while women prefer gift cards (63.8%), jewelry (33.3%) and home décor (25.9%). But here’s something that might surprise you: men will also spend about $20 more than women on holiday purchases ($698.76 for men, $679.48 for women) and are more likely to shop at department stores than their female counterparts (56.5% of men, 52.5% of women).
#9: The biggest spenders are just one click away. Gone are the days when online shoppers were simply bargain hunters who only wanted the lowest prices and free shipping. While those factors are still important, online shoppers have much deeper pockets this year: According to the survey, people who will shop online will spend 24.6 percent more than average adults ($858.49 for online shoppers vs. $688.87 for all adults). The group is also more likely to start shopping early (42.6% will start shopping before Halloween) and make non-gift purchases for themselves (61.4% of online shoppers vs. 57.1% of adults). And that bargain hunting mentality? Don’t count on it: Online shoppers are no more likely to say that sales and discounts are the main factor when deciding where to buy than average shoppers – 41.8 percent of respondents in both groups said sales were the overriding factor.
#10: Can you hear me now? Good. One of my favorite trends from the survey comes from a question we literally added at the last minute. Knowing that retailers were ramping up their mobile apps and websites – and understanding that iPhones and Droids are all the rage – we wanted to get a sense of how mobile devices would impact holiday shopping this year. So we asked people with smartphones if they planned to use their devices to research or make holiday purchases from a retailer.
The results? More than one-fourth of Americans who have a smartphone will use their mobile device to shop for gifts, compare prices and research products (or read reviews, buy merchandise, find nearby stores…the opportunities are truly endless). It’s no surprise that number is quite a bit higher among 18-24 year-olds (45.0%), but should serve as a clear signal to retailers that this mobile trend is not going away anytime soon.
So, there’s our list of the top ten holiday trends for 2010 based on NRF’s first holiday survey. What other trends do you think we’ll see develop over the next two months? What are we missing?