Positive American shoppers to buy more holiday gift cards

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By: Wise Marketer Staff |

Posted on November 10, 2006

With concerns about high fuel prices subsiding, American consumers have become more optimistic about the country's economy, according to the 21st Anniversary Holiday Survey of retail spending and trends, commissioned by Deloitte & Touche USA.

More than four out of five (82%) consumers surveyed say they feel secure about their jobs, and two-thirds (68%) expect the economy to improve or stay the same in 2007, compared with less than half (48%) in 2005. Interestingly, 92% say any recent change in the market value of their home will have no impact on holiday spending.

Pat Conroy, vice chairman and national managing principal for Deloitte's Consumer Business practice, said: "Overall spending is expected to be up for many key categories, supporting our forecast of 7% growth in sales this holiday season."

Debt not so dominant?
Breaking with conventional ideas about American consumers' attitudes toward debt and credit cards, 63% of total holiday purchases will be paid for using cash, cheques, or debit cards, according to the survey. And 38% of the individuals surveyed say they will not use credit cards at all for their holiday shopping.

Gift card trend
Gift cards are expected to continue to be the top gift purchase, with approximately two-thirds (66%) of consumers planning to buy them - roughly the same as in 2006. However, holiday shoppers are planning on buying more of them: this year, consumers intend to buy an average of 4.6 gift cards (up from 3.9 in 2005).

Despite their popularity, more people want to receive a gift card than want to give one: of those surveyed, 35% would rather get a gift card than merchandise. But 22% say they don't like to give gift cards because they're too impersonal. According to Deloitte & Touche, such a dichotomy represents a potential opportunity for retailers to market and sell gift cards to those who remain reluctant to buy them.

But gift cards may also represent a dubious benefit for retailers, according to Conroy: "As a result of buying gift cards last year, 50% of consumers spent less time shopping during the holidays and 41% bought fewer spontaneous, spur-of-the-moment items. Successful retailers will benefit from gift-card-and-product bundling, incentives for shoppers to buy additional products while in the store, and other strategies to up-sell and cross-sell using gift cards."

Shopping preferences
The survey also noted consumers' store format preferences and found that, in particular, department stores will continue to attract a substantial share of customers. Of those surveyed, 74% will shop at a discount department store this holiday season (compared to only 57% in 2005) and 48% will shop at a traditional department store (up from 42% in 2005).

While traditional department stores continue to be favoured by upper income households and older age groups, interest from younger groups is also increasing, with nearly half (47%) of Generation Y shoppers (aged 18-29) planning to shop in them (compared to 41% in 2005).

Conroy concludes: "Time pressures and a need for convenience have contributed to a long-term trend of fewer shopping trips and fewer stores visited, creating an opportunity for stores with a broad array of merchandise that can be one-stop- shops. With multiple departments and offerings, these stores can build broad relationships with customers that are key for success. Other critical factors this holiday season will include delivering a better customer experience, converting shoppers into buyers, and increasing share of wallet."

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