Deloitte's 24th Annual Holiday Survey Shows Consumers are Warming up to Spending, Although Gift Giving is Expected to Decline

NEW YORK, Oct. 28 /PRNewswire/ -- After one of the most difficult years on record for retailers and consumers, Americans are more optimistic as the holiday shopping season kicks off, according to Deloitte's 24th Annual Holiday Survey of retail spending and trends.

Fears about the recession are slowly subsiding, with more than half of those surveyed (54 percent) saying they expect the economy will improve in 2010, compared with 28 percent responding favorably last year. The optimism is also starting to show in Americans' shopping plans. More than half of consumers (51 percent) hope to spend more or the same on the holidays, an improvement from last year's 41 percent response.

Despite expectations for economic improvement, consumers continue to reduce their spending on gifts. The average number of gifts people plan to purchase declined to 18.2 from 21.5 last year and 23.1 in 2007. The amount consumers plan to spend on gifts is down as well, to $452 compared with $532 in 2008, and $569 in 2007.

Consumers, however, do appear willing to increase their spending on the non-gift items that traditionally account for a smaller portion of the holiday budget. These categories include socializing away from home, entertaining, non-gift clothing and home/holiday furnishings. These increases lift consumers' total anticipated holiday spend to $1,145, which is a 16 percent increase over last year.

Caution still reigns when it comes to purchasing behavior, as two-thirds (66 percent) of consumers plan to shop differently due to concerns about the economy. These shoppers demonstrated a focus on frugality in their intentions to buy items on sale (74 percent), buy lower-priced items (57 percent) and use more store coupons (54 percent).

Among consumers planning to spend less, worries over job loss and pay reduction rose sharply, doubling to 35 percent this year (from 17 percent in 2008). Concerns about higher food and energy prices, stock market volatility, and an overall concern about the economy have shifted downward, averaging a 21 percentage point drop from 2008.

"Consumers appear to be revisiting shopping categories that they had put on the back burner for a while, and they may be returning because of the need to replenish," said Stacy Janiak, vice chairman and Deloitte's U.S. Retail leader. "Over the past several months, we have seen key economic indicators ease from their worst levels, helping to put more resources back into Americans' pockets. As a result, a cautious upturn in sentiment may draw consumers out of their bunkers, turn their focus away from saving and debt reduction, and encourage them to do some holiday shopping for their homes, family and friends."

Discount Stores Still Top Destination; Gift Cards Remain Top Gift

Discount stores continue to hold the top spot as a shopping destination with nearly six out of 10 people (59 percent) saying they expect to shop at discount/value department stores. Online shopping remains strong at 42 percent, and the combined electronics, office supply and computer store category ranks third at 26 percent. Traditional department stores continue their downward trend, falling to 23 percent, a sharp drop from last year's 35 percent. Some of the more popular shopping destinations include toy stores, outlet stores/centers and off-price stores.

Gift cards hold their first-place position for the sixth year in a row, with 64 percent of consumers planning to buy them as presents. While the number of gift cards they plan to purchase remains nearly flat (5.4 from 5.3 last year), consumers' planned spending per card is $35, which is up from $28 last year and nearly back to the pre-recession average of $36 in 2007.

Technology-related gifts -- including game consoles, computer and video games, home, personal and automotive electronics -- continued to grow in popularity. Computer and video games lead the pack with 26 percent (up from 21 percent in 2008) of consumers planning to purchase these items, followed by game consoles at 13 percent (from 6 percent in 2008) and home electronics up to 12 percent (from 9 percent in 2008).

The Deal-Seeking Consumer May Turn Up Empty Handed

Consumers are expecting a repeat of last holiday season -- deep discounts and plenty to choose from. For example, 38 percent of those buying electronics and toys expect a discount of 50 percent off or more and half of those planning to purchase apparel (47 percent) and jewelry (50 percent) anticipate a discount of 50 percent or more.

"Consumers who hold out for deep discounts may not find the sale -- or the product -- in the store this season," said Janiak. "Retailers have maintained leaner inventories all year given the decreased level of spending. In this environment, retailers should consider engaging sales-seeking consumers at a different level by creating exciting in-store shopping experiences, reaching out to shoppers through social media or mobile technologies, or offering limited-time e-mail promotions."

Mobile Phone the New Shopping Guide

The popularity and ubiquity of mobile phones may be a bright side for retailers this year with one in five (19 percent) of consumers indicating they plan to use their mobile phone while shopping to find store locations, obtain coupons and sales information, and research products and prices. In the 18 to 29 years old age group, four out of 10 (39 percent) say they plan to use their mobile phone for holiday shopping.

About the Survey

The survey was commissioned by Deloitte and conducted online by an independent research company between September 24 and October 2, 2009. The survey polled a sample of 10,878 consumers and has a margin of error for the entire sample of plus or minus one percentage point.

For more information about Deloitte's Annual Holiday Survey, including interesting statistics, historical data and useful links, please visit www.deloitte.com/us/2009HolidaySurvey.

About Deloitte

As used in this document, "Deloitte" means Deloitte LLP and Deloitte Services LP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

SOURCE Deloitte

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