Holiday 2008 Consumer Trend Roundup

How will the uncertain economy affect consumer spending this holiday season?

Today’s post is a roundup of recent consumer research and forecasts on how much consumers expect to spend, what they’re looking for and where they plan to get it. It’s interesting but not surprising how some results really vary and even contradict each other (e.g. gift cards are hot, gift cards are not).

This research can’t make decisions for you but it might help you think through your customer segments (and personas) and consider how different types of consumers (what motivates them in a tough economy) experience your site/email offers and messaging.

For example, if you are Musician’s Friend and your customer typically buys music supplies for themselves — if gift givers love to give apparel and gift cards, you might market to your existing customer pushing those items along with an incentive like a gift card rebate to use for themselves in the new year.

Will shoppers spend more or less this year?

  • 26% of consumers plan to spend less, 11% expect to spend more, and 63% about the same. “For the first time I am predicting flat to declining sales for the holiday season,” stated Marshal Cohen, chief industry analyst, The NPD Group, Inc. NPD Group Holiday 2008 Survey
  • 59% will spend less, citing food prices (73%), energy prices (69%) the economy (61%) and job uncertainty (18%) as reasons. 11% are still paying off last year’s holiday purchases. Deloitte, October 2008

How important is price?

  • 60% say that lower prices, sales and special values will dictate where they shop (surveyed mid-September before the stock market’s major downturn). NPD Group, September 2008
  • 70% will shop sale items more often and 53% have become less brand loyal in favor of less expensive brands. Morpace, October 2008
  • 73% will shop where they can find the best value for their money. 72% will look for low prices. Convenient location, quality and selection of merchandise, and customer service/experience all ranked lower. Deloitte, October 2008

How important is free shipping?

Free shipping (95%) and sales/specials (83%) top of the list of what influences online gift buying. e-tailing group, October 2008

  • 75% prefer to shop with online retailers that offer free shipping. 58% claim that shipping prices deter them from shopping online. Forrester Research, October 2008

More than 40% of people who abandoned their online shopping carts said they did so because of high shipping costs, according to a recent survey by the online payment company PayPal. Nearly 60% of those polled by BIGresearch said free shipping was a “very important” factor in their decision to shop online. The National Retail Federation’s digital division, Shop.org, says eight out of 10 online retailers offered free shipping during the past two holiday seasons, up from about 60% in 2004.

Source: Despite higher fuel costs, retailers cut shipping rates USA Today, September 2008

What items to shoppers want to give / receive?

“[Sunglasses] are the most sought-after item by young adults and will surely be their most desired gift,” it says–particularly those with large logos. “Sunglasses will be this year’s handbag.” NPD Group, October 2008

Source: Outlook For US Online Holiday Sales, Forrester Research, October 2008

  • Consumer electronics comprise four of the top 10 items on adults’ holiday gift wish lists along with computers, televisions, video game systems and cell phones. Nearly 80% of adults and 84% of teens expressed interest in receiving a consumer electronics product as a gift. 28% of the total holiday budget is being allocated for CE purchases, an increase of 6% from last year’s holiday season. Consumer Electronics Association
  • 66% plan to buy gift cards, the top gift purchase for the 5th straight year, slightly below last year’s 69% but will buy fewer cards on average: 5.3 cards compared to 5.5 in 2007, and will spend $28.43 per card this year vs. $36.18 last year. There’s a trend toward less store/product cards and more gasoline cards than last season. Deloitte, October 2008
  • 24% of consumers plan to increase their spending on gift cards, the restaurant/fast food category outselling all others. 50% consider purchasing a gift card if it comes with a coupon/discount for themselves. Archstone Consulting, October 2008
  • There are few “must-have” gifts this year, compared to last year where many retailers used GPS systems as door-busters. NPD Group Holiday 2008 Survey

Which categories are on the decline?

  • Department stores and retailers of electronics, toys, home improvement supplies, and office supplies are likely to feel the brunt of the economic slowdown as consumers shift their purchases to more value-oriented retailers. Nielsen, October 2008
  • Home improvements and home/holiday furnishings are most likely to decline from last year. Deloitte, October 2008

Will shoppers use the online channel?

  • Online retailers, dollar stores, grocery stores, supercenters, mass merchandisers, and club stores are expected to attract the lion’s share of holiday spending, as consumers seek to minimize the number of shopping trips they make — and find good values. Nielsen, October 2008
  • 49% of adults who shop online four or more times per year, spending at least $500 annually, will buy gifts online, compared with 44% who plan to do so in-store. e-tailing group, October 2008
  • Reasons for shopping online are saving time (88%), locating hard-to-find products (84%), greater selection (83%) avoiding crowds (83%) and saving money (80%). e-tailing group, October 2008
  • Reasons for shopping online: find unique products not available elsewhere (61%), comparison shopping (52%), find the best values and deals (48%), high gas prices (36% vs 22% last year). Forrester Research, October 2008

We’d love to hear your thoughts in the comments – does research like this influence your marketing strategies? Should they just be taken with a grain of salt?

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16 Responses to “Holiday 2008 Consumer Trend Roundup”

  1. Wow, that’s a lot of information to digest! Thanks for pulling this all together.

    With the economy continuing to spiral out of control, it is going to be a very interesting holiday season. We’ll find out where people’s priorities are.

    Af for the gift cards, I guess they’re still hot… just not as hot as last year?

    Michael

  2. Tim says:

    Some drastic differences between some of the researchers. For example, Deloitte says 66% plan to purchase gift cards while NPD says they are “losing popularity” and only 38% plan to purchase them

  3. @Michael and Tim,

    Yes, that’s why I’m not much of a believer in research/stats – take them for what they are. I thought the side-by-side discrepancies were intriguing ;)

    I am interested in watching how retailers react to consumer attitudes…

  4. Carla says:

    I can see how spending on home improvements will decline (given many people are losing their homes). But on another blog, it was stated that gift card purchases will increase this year. I guess we won’t know for sure until its all said and done.

  5. [...] Read the full article here >> christmas, christmas spending, online shopping, stats [...]

  6. Jason says:

    Great research guys, and good timing with the “Christmas” keyword traffic starting to ramp up.

  7. [...] Wenda Harris Millard “Flat is the new up.” quoted at the recent EconWomen conference. She touches on some of the consumer trends this 2008 holiday season. [...]

  8. [...] Wenda Harris Millard “Flat is the new up.” quoted at the recent EconWomen conference. She touches on some of the consumer trends this 2008 holiday season. [...]

  9. [...] still have a few weeks before the Thanksgiving holiday (for readers in the U.S.), but with forecasts predicting dire decreases in holiday spending, marketers are already making an effort to get their [...]

  10. Books being bought more than electronics this year? For who? College students? What research is this based on? Survey’s and last year? We don’t too much depend on stats and surveyed research either. Public samples are skewed by individuals who do not genuinely have any interest in the research they are being used for.

  11. @electronics_junkie Forrester Research (above) is a very reputable research firm, and Shop.org also reported books outselling consumer electronics online
    http://www.shop.org/c/document_library/get_file?folderId=131&name=DLFE-432.pdf

  12. I see, I stand corrected. Thank you for the guide.

  13. For sure it is going to be very interesting holiday season,

    The percentage may no be change but the volume of spending is a mystery.

  14. Alan says:

    Fantastic article! Thanks for the great insight. I know for a fact that one of my clients will be trying to coax some sales by offering free shipping, which is something we have refused to do in the past.

  15. are you ready for the Upcoming holiday?

  16. What a fantastic read. I wonder what the figures are for 2009? Thanks for the useful article Linda.

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