Nielsen: Economy, The Grinch Who Stole Christmas

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Compared to last year, far more consumers plan to spend less this holiday season than those who plan to spend more, according to new research from Nielsen. Indeed, 42% of respondents to a recent survey said they plan to spend less, compared to just 4% who plan to spend more.

"While the economy appears to be improving at a snail's pace, it's apparent that many consumers intend to spend less and save more this holiday season," said Ken Cassar, VP of Industry Insights at The Nielsen Company.

Worse still, of the money that consumers do plan to spend this holiday season, a smaller percentage will be spent online. A full 63% of survey respondents said they would do at least some holiday shopping online -- down 10 points from two years ago.

Meanwhile, 7 percent of respondents said they would not do any shopping online, compared to just 1 percent in 2007.

Among those that do plan to shop online this holiday season, many consumers expect to spend significantly less than last year. In 2008, 42% said they would spend more than $300 online during the holiday season. This year, that percentage has dropped to just 31%, while 22% of respondents said they will spend less than $100 online.

Why do consumers choose to shop online at all? "Interestingly, the main reason is not to save money, but for convenience," said Cassar. "Respondents said the top reason they would shop online was the ability to shop whenever they wanted, followed closely by the ability to avoid the large crowds associated with holiday shopping."

While consumers appear to no longer view the Internet as a value channel, they still see it as a place to do comparison-shopping, find coupons and do research, according to Nielsen.

It is not just consumers coming from lower household incomes, either. Shoppers of all ages and income levels rely on the Internet to inform their in-store purchases. In October 2009, over one-third of the U.S. online population visited at least one deal-oriented Web site.

While many consumers don't feel that they save money by making purchases online, they do view the Internet as a deal-seeking venue, Nielsen finds.

When asked how they use the Internet before going shopping in physical stores, 55% of respondents said they use the Internet to compare prices across retailers, and 49% answered that they use the Web to learn about sales and promotions available in physical stores.

It was clear to Cassar that while the majority of all purchases continue to take place offline, the Internet has an important role to play. "Deals found online impact holiday purchase decisions and drive purchases at brick and mortar stores."

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