A new survey of how consumers are likely to spend their money in the upcoming holiday season found a few unexpected bright spots: Yes, they'll cut back on gifts. But they also anticipate spending more making merry, and as a result, will increase their holiday-related spending 16%.
Deloitte's 24th Annual Holiday Survey reports that 54% of the nearly 11,000 adults it surveyed believe the economy will pick up in 2010, and 51% plan to spend as much -- or maybe even a little more -- on this year's holiday.
They are still intent, however, on cutting back spending on gifts, including paring the number of people on their gift list. The amount they intend to spend on gifts -- on average -- is $452, compared with $532 in 2008, and $569 in the prior year. But overall, they see their total holiday spending climbing to $1,145, a hefty 16% increase over last year -- an increase not seen in many other surveys. That's due to big increases in socializing away from home ($243), entertaining at home ($201), non-gift clothing for family ($147), and new home/holiday furnishings ($102).
"When people pulled back last year, they realized that more important than the gift are the connections, and they are spending more time with friends and family," Stacy Janiak, vice chairman and Deloitte's U.S. Retail leader, tells Marketing Daily. "And looking at clothing and home furnishings, consumers may be using holiday time to replenish items they've held off buying for some time."
They also say they intend to watch sales closely and buy lower-cost items. While the economy still has them skittish, the focus now is on potential job loss and pay cuts, and 35% of respondents say they are concerned -- up from 17% last year. Fears about the stock market and energy prices have dwindled, however, falling 21 percentage points from last year.
"Consumers are in a very different place today," she says, adding that last year, "the severity of the situation had not even fully impacted them yet." The survey revealed two types of consumers, she says.
"There is a group that is less anxious this year because they made it through the storm. But there is also a contingent struggling with things like job loss or pay reductions. For example, just over one-third (34%) said their current financial situation is worse than last year, with no sign of improvement. That is also reflected in the reasons why they plan to spend less on gifts."
Because of the focus on price, discounters like Wal-Mart and Target will be the shopping destination of choice, named by 59% of respondents, and about 42% will do some shopping online. The big change from last year is that far fewer consumers -- 23%, compared to 35% in 2008 -- plan to shop at a department store.
And while other surveys have shown consumers to be less avid about gift cards, Deloitte says 64% of those it surveyed plan to buy one, making it the top gift for six years running. And they plan to spend $35 per card, up from $28 last year. One change, however, is the popularity of mobile technology as a shopping aid -- 19% of shoppers say they plan to use their phones to find store locations, get coupons, and research products and prices. In the 18- to-29-year-old age group, that number rose to 39%.