‘Tis Not a Happy Halloween for Economy
The slow economic recovery and soaring household costs are “casting a chill” over consumer confidence, but ran short of bringing back the ghost of recessions past.
Deloitte’s 26th annual survey of holiday spending intentions and trends showed that while two-thirds (67 percent) of consumers expect the economy to stay the same or weaken next year, nearly three out of five (59 percent) will put aside economic worries and spend the same or more this holiday season. The trend shows a slight decline from 2010 but an eight percentage point rise from 2009.
Shoppers planning to spend less this year (42 percent) point to higher costs impacting their household budgets. Six out of 10 cite higher food prices (63 percent) and higher gas prices (60 percent) as reasons for spending less this year. Roughly half (49 percent) point to higher energy costs.
“Lackluster employment growth, debt crises and stock market fluctuations have battered consumer confidence while inflation left many with lighter wallets this fall,” said Alison Paul, vice chairman and U.S. retail & distribution leader, Deloitte LLP.
“Consumers will be conservative this holiday season, but remain resilient and maintain a more positive interest in holiday shopping than we witnessed during the recession,” Paul added.
With high prices leaving less in the household budget for other things, many consumers are thinking twice of gift-giving this year. Holiday shoppers plan to buy an average of 14.7 holiday gifts this year, down from 16.8 last year and continuing a four-year decline in the number of gifts they plan to purchase.
Higher-income households’ gift spending will hold up while middle- and lower-income groups are paring back. Households earning $100,000 or more annually expect to trim a mere 2 percent off gift spending to shell out an average of $812 on gifts this holiday season compared with a 26 percent drop to $291 on gifts among those earning less than $100,000.
Despite smaller budgets, consumers may make the gifts more personal as more shoppers skip gift cards and cash this year. Consumers planning to purchase gift cards (45 percent) fell 11 percentage points to unseat this category’s seven-year reign at No.1 and elevate clothing (48 percent) to the top spot. The number who plan to hand out cash slid 7 percentage points to just one-quarter (25 percent) of respondents.
Online shopping ‘reigns’
Deal-seekers are increasingly using online channels to get the most value. Nearly seven out of 10 (68 percent) of consumers plan to change the way they shop to save money, and more than half in this group (51 percent) will head online to find better prices. This represents a 10 percentage point jump from last year, while 46 percent plan to buy more items that qualify for free shipping.
Among shopping destinations, the Internet jumped 13 percentage points to join discount stores at the top of the list with nearly half (48 percent) of consumers planning to shop these two destinations for holiday gifts. While online interest climbed, discounters slid 10 percentage points from the 2010 survey.
Smartphones and social networks
Many consumers will take out their phones before their wallets this holiday season with even more visiting social media sites before tackling their gift lists, Ernst & Young noted.
More than one-quarter (27 percent) of smartphone owners plan to use their devices for holiday shopping to search for store locations (67 percent), compare prices (59 percent) and check product availability (46 percent). Additionally, 44 percent say they plan to use social media to seek discounts, read reviews and check family and friends’ gift lists.
“Consumers are using online and mobile platforms to make the most of their holiday budgets, and the survey indicates that they will do more than just compare prices,” said Paul.
“Retailers that use mobile and online channels to show product availability, locations and pricing but add customized promotions and gift ideas may encourage shoppers to come in the door for a specific gift and take additional items to the register.”
Consumers not skipping holiday rush
More than half of consumers (53 percent) plan to begin shopping before Thanksgiving, but nearly three quarters (73 percent) intend to hold out until after this holiday to make the majority of their purchases.
Gen Y consumers are most likely to embrace the Black Friday tradition as more than four out of 10 (42 percent) 18-24 year old respondents plan to shop that day compared to an average of 24 percent among those age 25 and older. Nearly the same amount (37 percent) intend to partake in Cyber Monday shopping, compared with just 20 percent among those in older age groups.