Gift Spending Will Hold Steady or Rise, Surveys Predict

Retailers can take heart in the results of several recent projections about holiday gift spending.

Deloitte's 23rd Annual Holiday Survey shows that while overall spending is expected to be down, spending on gifts is expected to hold steady, and the number of gifts consumers plan to give is actually up compared to last year: an average of 23, up from 22 last year and the highest since 2002.

The New York-based professional services firm says 41% of consumers surveyed expect to reduce their overall 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. The survey of 14,135 consumers was commissioned by Deloitte and conducted online by an independent research company between Sept. 24 and Oct. 4.

Department stores are the top shopping destination. Older consumers (ages 61-74) plan to spend 27% more than the average consumer. For the fourth straight year, gift cards are expected to be the top gift purchase, with 69% of consumers surveyed planning to buy them, compared with 66% last year. Holiday shoppers also plan to buy even more cards this year: an average of 5.5, compared with the 4.6 cards they planned to buy last year. One in six consumers (16%) plans to buy 10 or more cards, up from 11% last year. Consumers are expected to spend more on gift cards overall, and more per card: an average $36.25, compared with $30.22 last year.



About 35% of consumers surveyed would rather receive 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). Almost half (46%) intend to buy them for immediate family, but only 14% say they plan to buy them for spouses or significant others.

"As gift cards continue to grow in popularity, retailers need to be even more creative in their redemption programs, so that they can quickly recognize the dollars in their revenues and potentially capture additional spend beyond the value of the card," says Stacy Janiak, Deloitte's U.S. retail leader. "As we approach the holidays, retailers could encourage consumers to redeem their unused gift cards for this year's gift purchases by offering a dollar amount or percentage off the purchase, free gift wrap, or some other bonus." According to the survey, 49% of consumers have at least one partially used or completely unused gift card; on average, these consumers have 3.7 such cards.

Recent product recalls have increased consumer concerns about the safety of imported products, and those over age 44 are most concerned. More than half of all consumers surveyed (54%) say a product's country of origin is important to them when making a purchase decision.

A separate study by the Luxury Institute found that 57% of wealthy consumers said they would give greater consideration to buying brands they think are socially responsible. That's up from 51% in 2005. Such sentiments may be sharpened during the holidays, when the less fortunate come to mind. Women are especially devoted to avoiding "ethically challenged" brands, with 83% saying they would not purchase them.

The National Retail Federation, the industry's trade group, forecasts holiday sales to grow by 4%, to $474.5 billion, down from 4.6% growth in 2006.

A Consumer Reports survey found that one in four shoppers expects to spend less money this holiday season than last. More shoppers also said they expected to delay spending until later in the season, according to the telephone survey of 1,003 adults conducted Oct. 18-21.

Similar sentiments were reported by The NPD Group, a retail market research firm that is dubbing this season the "hesitation holiday." Its October survey showed that 41% of consumers plan to put off holiday shopping until at least the day after Thanksgiving, in part because they perceive there are few "must-have" gifts and have come to expect deep discounts later in the season.

In a BDO Seidman survey of 100 CMOs conducted last month, 73% predicted deeper discounts this holiday season, while 64% said they were more cautious about sales and inventory plans this year.

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