New Kellogg Shopper Index Explores Link Between Psychology, Household Finance in Holiday Shopping Habits

EVANSTON, Ill., Dec. 1, 2010 /PRNewswire/ -- Black Friday and Cyber Monday unofficially marked the start of the holiday shopping season—and signaled potentially good news about spending. Consumer spending reports show a slight uptick in holiday shopping this season compared to last year. This trend is a promising sign for the economy and retailers, and a new index from the Kellogg School of Management at Northwestern University finds this year's shoppers may not be your average consumers.

According to the Kellogg Shopper Index, this year's biggest holiday spenders include those who have had a significant increase in perceived security around their income and job. The survey also finds that the powerful and materialistic will also be at the cash registers, and even though it's the season for giving, many of their purchases will be for themselves.

The Kellogg Shopper Index is a new, ongoing study of consumers and their spending habits, connecting academic rigor with the practice of marketing. Unlike other surveys and indices, the Kellogg Shopper Index explores how underlying consumer psychology and changes in household finance affect consumer shopping behaviors and trends.  The survey, supported by the school's Center for Global Marketing Practice, is designed and led by Kellogg marketing faculty members Eric Anderson, Derek Rucker, and Richard Wilson.

This first issue of the Index explores shopping and gift-giving trends for the 2010 holiday season. Preliminary data was collected between October 26 and November 16, via an online survey of approximately 1,200 consumers. Based on the self-reported results of the panel, the researchers identified several overarching trends driving holiday spending this year:

Change in Income vs. Holiday Spending

• Participants who had a significant increase in their income, perhaps from getting a new job, indicated they would spend 16 percent more in holiday gifts versus last year
• However, participants who said they experienced a decrease in income, due to a job loss or pay cut, for example, plan to spend 9 percent less compared to 2009

Job Security

• People who feel more secure about their job this year plan to spend 10 percent more on holiday gifts. Those with relatively stable job security said they will spend 2 percent more
• People whose job security has worsened noted they will spend 4 percent less this year

Materialism*

• Highly materialistic panelists said they would allocate 34 percent of their holiday gift budget on themselves and 66 percent spent on gifts for others
• Less materialistic participants said they will spend only 17 percent on themselves and 83 percent on gifts for others

* (For this survey, participants were defined as "materialistic" when they responded positively to questions about how possessions are signs of success, buying brand names and buying items to impress others.)

The Kellogg Shopper Index reveals how an individual's level of power -- or relative control over others or resources -- affects spending. "A person's sense of power can come from a number of places, such as job security, job title or social status. How powerful a person feels might not be obvious, but it becomes very apparent when it comes to consumer spending," said Rucker. "What is important is that our survey provides a starting point to look inside the motives that underlie consumer spending habits."

Who is Shopping? Who is Spending?

This season, two groups indicated they would spend more on holiday gifts as compared to last year: People who buy premium gifts for themselves or others, and "deal shoppers" looking for value. "Essentially not everyone is coming back to shop," said Anderson. "While our panelists indicate they plan to spend slightly more than last year, we see two very different psychological mindsets at play. The first set represents those likely to have foregone nice rewards over the last two years, and who now want to treat themselves or others. The second set represents those who are still very cautious but are willing to spend for the right deal."

Future survey results will shed light on shopping trends among women, ethnic minorities and generations. Additionally, forthcoming reports will examine how practitioners anticipate and respond to shopper behavior.

"Over time, this initiative will present a valuable longitudinal view of buying habits across key shopping cycles, and will be expanded to look at global markets outside the United States," said Wilson. "From our perspective at the Center for Global Marketing Practice, further academic research and a deeper understanding of what's causing these types of consumer behaviors to manifest in the marketplace will help drive more effective practitioner marketing strategy."

ABOUT THE SURVEY

Supported by the Kellogg Center for Global Marketing Practice, the Kellogg Shopper Index is a national survey that collects data from an online panel of more than 1,000 participants. The purpose of the Index is to develop a 360-degree perspective of consumer spending habits that explores what/how people plan to purchase items or services, as well as the underlying psychological and financial drivers of their spending behavior. Based on key findings, the Index offers fresh insights and practical applications for businesses and marketing practitioners. The Kellogg Shopper Index is compliant with the Institutional Review Board (IRB) standards. For more information about the Kellogg Center for Global Marketing Practice, visit http://www.kellogg.northwestern.edu/research/cfgmp/index.htm.

For more information about the Kellogg School of Management at Northwestern University, visit http://kellogg.northwestern.edu.

SOURCE Kellogg School of Management