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

November 7, 2007

This article is included in these additional categories:

Boomers & Older | Household Income | Retail & E-Commerce

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.

The survey finds that four in 10 consumers (41%) 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.

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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% 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 US 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% of consumers surveyed saying the economy will improve or remain the same next year.
  • However, the vast majority (85%) say they feel secure about their jobs, which is about even with last year.

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  • 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% of shoppers say they plan to use to their shopping; moreover, some 19% say they will shop primarily/entirely online this holiday season.

Top 15 shopping venues:

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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%) of consumers surveyed planning to buy them, compared with 66% last year:

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  • 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%) plan to buy 10 or more cards, compared with 11% 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%) would rather get a gift card than merchandise, an increase from last year’s 35%.
  • Also, resistance to giving gift cards continues to decline: 19% say they don’t like to give gift cards because they’re too impersonal (down from 22% last year).
  • Consumers said cards are popular gifts for adults, teens and children alike, and almost half (46%) intend to buy them for immediate family; however, they are hesitant to buy them for spouses or significant others, with only 14% saying they plan to buy them for those recipients.
  • Nearly half of consumers (49%) have at least one partially or completely unused gift card; on average, these consumers have 3.7 unused cards.

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%) say a product’s country of origin is important to them when making a purchase decision.
  • Almost four in 10 consumers (38%) said they feel food products imported from other countries are not safe, and more than one-third of consumers (35%) said the same for non-food products.
  • Almost six in 10 (58%) say the recent news stories about product recalls will influence some of their purchase decisions this holiday season:
    • Of those shoppers, 82% say such concerns will influence their buying decisions on toys.
    • 70% say the same with respect to food purchases.

“The recent product recalls present a potential opportunity for savvy retailers,” said 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.”

A Green Christmas?

“For perhaps the first time ever, it’s going to be a Green Christmas for consumers,” said Janiak. “This year’s shoppers are making conscious choices to shop at retailers they view as environmentally responsible, buy green gifts, and make changes in their usual holiday routines. Perhaps most surprisingly, a notable percentage is willing to pay more to go green this Christmas.”

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Some findings on the greenness of consumers:

  • 17% said they are willing to pay more for green gifts or supplies.
  • 20% will consider not wrapping holiday gifts to conserve paper.
  • 18% will purchase more eco-friendly products this holiday season than they did in the past.
  • 13% will purchase more organic products this holiday season than they did in the past.

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.

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