Study shows retail trends for the holiday season

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By: Wise Marketer Staff |

Posted on November 29, 2007

Study shows retail trends for the holiday season

A combination of unseasonable weather, subprime mortgage and Wall Street problems, and higher oil prices have all conspired to diminish US consumers' planned holiday spending, according to customer loyalty research consultancy Brand Keys.

The company interviewed 16,000 consumers in the nine US census regions and asked them about holiday season spending plans, and found that the average shopper intended to spend only 2% more than last year's spending estimate on gifts and "good cheer".

Holiday spending trend With fuel prices having increased significantly in recent months, consumers indicated that they were thinking about spending only a little more for the 2007 holiday season than they did in 2006. A continuing trend that Brand Keys has observed is that, no matter how much consumers spend, they still want to be perceived as "wise shoppers".

"Given that there wasn't a great increase in anticipated spending, expect to see US retailers competing for fewer consumer dollars. There are always lower product prices during the holiday season, but retailers now have to plan their promotions very carefully," said Brand Keys president, Robert Passikoff.

Small increase expected When asked if they expected to spend more, less, or the same in 2007 as they did in 2006, the number who said they were going to spend less increased for the first time in nearly a decade, actually doubling when compared to last year (30% in 2007, versus 15% in 2006).

At the same time, 20% said they expected spend more than they did in 2006 (up 33%), while 50% said they would spend the same (down 29%).

Average holiday spend On average, the consumers surveyed expected to spend about US$815, which is only 2% more than was expected in 2006.

Passikoff observed that consumers are now watching carefully for shopping opportunities to help stretch their money, and that although many retailers are offering more discounts, they are likely to be shorter lived.

Most popular channels Specific loyalty to retail channels is again in question as consumers indicated that they would use the full range of retail formats and channels for their holiday shopping.

"More shoppers than ever, with wallets diminished by fuel prices - and seeking to avoid the crowds, queues, and bricks-and-mortar shopping stress - said they would go online to do their shopping this holiday season," said Passikoff, who expects ever-increasing fuel prices to continue to push the internet channel further into the mainstream of retail distribution formats.

Moving away from bricks-and-mortar "Given that consumers are being careful about spending, they are also looking for retailers where there is a higher levels of customer service and more upscale merchandise," said Passikoff. "Attributes like those seem to pump up the price-value equation. That's where the department stores are going to benefit most and will most probably seek to encourage multiple visits by customers."

Three-quarters of consumers (75%) said they were planning to use discount department stores, down 6% from 2006. The same proportion (75%) planned to use traditional department stores (up 15%), while 70% planned to shop online (up 17%), 45% planned to use specialty stores (down 10%), and 55% were planning to use catalogues (up 10%).

"Location and Value are still the key engagement and loyalty drivers for the retail category. But even with tighter budgets, factors that play a role in engendering loyalty, sales, and profits still include merchandise range, store reputation, and especially the overall shopping experience," concluded Passikoff.

Most popular categories Consumers are anticipating discounts in the electronics/technology area, as those kinds of offers tend to generate a lot of store traffic. But gift cards have also become a very safe and acceptable holiday gift.

The most popular holiday shopping categories included:

  1. Gift cards (70%);
  2. Clothing & accessories (54%);
  3. Electronics, computers & phones (63%);
  4. CDs/DVDs/video games (55%);
  5. Books (30%);
  6. Home decor (20%);
  7. Travel (5%).

Interestingly, slightly more than half of the consumers surveyed (52%) indicated that they had already begun their holiday shopping earlier in the year, with most indicating they had been looking for gifts (and sales) before the traditional post-Thanksgiving 'Black Friday'.

More Info: 

http://www.brandkeys.com