Holiday Gift-Buying to Hold Steady, Despite Lower Spending Overall

While many Americans say they intend to spend less this 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, released by Deloitte, reports sister site MarketingCharts.

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Shortcuts to charts/tables referenced in this article:

1. Key holiday spending categories, 2005-2007
2. Consumers’ opinion of their job security, 2003-2007
3. Top 15 holiday season shopping venue types
4. Consumers’ plans to purchase gift card, by card type

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The survey finds 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 (see chart of key spending categories, 2005-2007). 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.Moreover, older consumers - those age 61-74 - plan to spend 27 percent more than the average consumer, giving added credence to this demographic, which traditionally has reported higher holiday spending.

“American consumers are resilient, and clearly they are in a giving mood this year,” said Deloitte U.S. Retail Leader Stacy Janiak. “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.”

The backdrop to these spending expectations:

• American consumers are less optimistic about the economy, with only 57 percent of consumers surveyed saying the economy will improve or remain the same next year.
• However, the vast majority (85 percent) say they feel secure about their jobs, which is about even with last year (see chart of consumers’ opinion of their job security, 2003-2007).
• Lower-income households were more likely to cite higher food and fuel costs as the reasons for spending less this year.
• Those at higher income levels were more likely to cite volatility in the stock market and declining home values.A

Plethora of Places to Shop

Department stores - both traditional and discount - remain 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.

Up next is the internet, which 33 percent of shoppers say they plan to use to their shopping; moreover, some 19 percent say they will shop primarily/entirely online this holiday season (see table of top 15 holiday season shopping venue types).

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 (see chart of consumers’ plans to purchase gift card, by card type).

• Holiday shoppers are planning to buy even more cards this year: an average of 5.5 cards, compared with the 4.6 they had last year planned to buy.
• 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.
• Gift cards continue to grow in acceptance: Almost four in 10 consumers surveyed (39 percent) would rather get a gift card than merchandise, an increase from last year’s 35 percent.
• Also, resistance to giving gift cards continues to decline: 19 percent say they don’t like to give gift cards because they’re too impersonal (down from 22 percent last year).
• Consumers said cards are popular gifts for adults, teens and children alike, and almost half (46 percent) intend to buy them for immediate family; however, they are hesitant to buy them for spouses or significant others, with only 14 percent saying they plan to buy them for those recipients.
• Nearly half of consumers (49 percent) have at least one partially or completely unused gift card; on average, these consumers have 3.7 unused cards.

MarketingCharts has more findings, including on gift buyers’ concerns about imports and “green” shopping.

About the Survey: The Annual Holiday Survey was commissioned by Deloitte and conducted online by an independent research company between September 24 and October 4, 2007. The survey polled a sample of 14,135 consumers. For more information, including historical data and useful links, see www.deloitte.com/us/2007HolidaySurvey.