Cautious Consumers Trim Holiday Gift Giving Budgets

gift cardAccording to NRF Survey consumers are setting a modest budget for gifts while they wait to see how the U.S. economy fares the in coming months.

Faced with continued economic uncertainty and used to doing more with less, consumers will take a conservative approach to spending this holiday season.

According to NRF’s holiday consumer spending survey conducted by Prosper Insights & Analytics, the average holiday shopper will spend $737.95 on gifts, décor, greeting cards and more, 2% less than the $752.24 they actually spent last year.*

NRF is forecasting holiday sales will increase 3.9% to $602.1 billion.**

“Though the foundation for solid holiday season growth exists, Americans are questioning the stability of our economy, our government and their own finances,” said NRF President and CEO Matthew Shay. “We expect consumers to set a modest budget for gifts and other holiday related purchases as they wait and see what will become of the U.S. economy in the coming months.

“Retailers have urged Congress and the Administration to seek a long-term solution for funding the government and extending the debt ceiling instead of kicking the can down the road once again. A band-aid approach is not the answer. Americans deserve to feel good about spending their hard-earned money on gifts for others, and this holiday season it’s evident some could second-guess their spending,” continued Shay.

Washington Gridlock to Impact Consumer Spending
For the first time, NRF asked holiday shoppers if the political gridlock in Washington around U.S. fiscal concerns would affect their holiday spending plans. On average, 29% of respondents said the situation would somewhat or very likely affect their spending plans. Nearly one-third (32.7%) of those between the ages of 55 and 64 said political gridlock in Washington was somewhat or very likely to affect their spending, the highest percent among all age groups surveyed.

When asked specifically about the overall state of the economy and how it would affect their spending plans, more than half (51.0%) of consumers said the economy would in some way impact how they spend this holiday season. Specifically, 79.5% plan to spend less overall, looking to cut corners and tighten budgets where they can.

Holiday Shoppers Looking to Treat Family
In order to make room in their budgets this year, consumers will cut back on “self-gifting,” or treating themselves to something because the deals are too good to pass up. When asked if they plan to take advantage of sales or price discounts during the holiday season to make additional non-gift purchases, 57% said yes, down from 59%. last year. Self-gifters will spend an average of $129.62 this year, down from a survey high of $140.43 last year and $137.17 in 2011.

According to the survey, the biggest portion of shoppers’ budget will go towards gifts for family members, with the average person planning to spend $415.50 on mom, dad, and other loved ones, down slightly from the actual $423.36 they spent last year.

Additionally, people will spend $72.14 on friends, $23.59 on co-workers and $25.63 on others, such as pets and community members. Consumers will also spend on food and candy ($100.35), greeting cards ($28.03) and flowers ($21.12). When it comes to decorations, the average person will spend $51.60. Total spending on holiday décor will reach $6.8 billion.

“Consumers have had years of practice when it comes to managing tight budgets while still spending on items they need to, whether it be gifts or groceries for the family,” said Prosper Insights Consumer Insights Director Pam Goodfellow. “Retailers can expect to see practical and refined attitudes from their customers this holiday season as families make thoughtful decisions about what they need to buy and what they can pass on.”

Shopping Early to Spread Out Budgets
Consistent with results seen the past 11 years, four in 10 (41.2%) Americans say they will begin holiday shopping before Halloween. Specifically, 12.4% say they started before September, 8.2% began in September, and 20.6% will begin in October. More than one-third (38.8%) will begin in November and 16% plan to start shopping in the first two weeks of December. Some 3.9% will wait until last minute and shop in the last two weeks of the month.

For the first time NRF asked shoppers why they shop early for holiday items. Of those who shop prior to or in September and October, six in 10 (60.3%) do so to spread out their gift shopping budget. Another four in 10 (41.9%) said the prices and promotions are too good to pass up. Additionally, 46.5% shop early to avoid the crowds associated with November and December shopping, and 44.2% do so to avoid the stress of last-minute shopping.

Holiday Shopping Online
With plenty of options to shop around for the best value, consumers will look to discounters (64.7%), department stores (56.3%), and grocery stores (51.1%) for their gifts and goods this holiday season. More than half (51.5%) will shop online and 35.1 percent will shop at clothing or accessories stores. Additionally, 29.5% will shop at electronics stores and 20.9% will shop at drug stores.

Whether to comparison shop or look for deals on their mobile device while out and about, the Internet will play a crucial role for retailers and shoppers this year. The average person will complete about 39.5% of their shopping on retail and other company Websites, up from 38.8% last year and the highest amount in the survey’s history. Shop.org, NRF’s digital division, is forecasting online holiday sales will grow between 13-15% t to as much as $82 billion.***

Smartphones, Tablets to Aid in Holiday Purchases
As retailers improve their mobile Websites and company apps, more people are drawn to the convenience of shopping using their mobile and tablet devices. According to the survey, more than half (56.3%) of holiday shoppers say they own a smartphone, and more than one-third (34%) own a tablet—both significantly higher than this time last year. Of those who own a smartphone, 53.8% will use their device to look up store hours, compare prices and purchase products; six in 10 (63.2%) tablet owners will use their device to shop, compare prices and look up product information.

Gift Cards
When it comes to holiday wish lists, gift cards take the prize once again as the most requested gift item for the seventh year in a row. According to the survey, six in 10 (59.4%) Americans say they’d most like to receive gift cards. After a few years on the backburner, clothing and clothing accessories will fill holiday celebrants’ wish lists with more than half (51.2%) requesting these items, up from 49.1% last year and the highest amount seen since 2006.

More than one-third (36.1%) want electronics, one-quarter (23.3%) want jewelry and 20.8% want home decor or home-related furnishings.

Sales and Discounts
Holiday shoppers fine tune their skills each holiday season in order to maneuver the stores, discover the best free-shipping deals and perfect their hassle-free shopping experience. When it comes to decisions like where to shop, price and promotions are top-of-mind. According to the survey, 35.6% said the most important factor in deciding where to shop are offers for sales and discounts, along with 16.4% who say the most important factor is selection of merchandise and 13.6% who say it’s quality of merchandise. Three percent (3.4%) rate free shipping or shipping promotions as the most important factor, up from 2.9% last year.

The NRF 2013 Holiday Consumer Spending Survey was designed to gauge consumer behavior and shopping trends related to the winter holidays. The survey polled 6,415 consumers and was conducted for NRF by Prosper Insights & Analytics, Oct. 1-8, 2013. The consumer poll has a margin of error of plus or minus 1.2 percentage points.

* Spending amounts reflect actual spending that occurred during 2012 holiday season, which was derived using government data from the U.S. Commerce Department in an effort to gauge average spend per person during the months of November and December.

** NRF defines the holiday season as sales in the months of November and December and forecasts holiday sales growth each year based on U.S. Commerce Department data such as previous months retail sales, the housing market, employment and more. NRF’s consumer spending surveys are not a part of the forecast model.

*** Shop.org for the first time released an online holiday sales forecast. The online forecast is based on data collected by the U.S. Department of Commerce, the Federal Reserve, the U.S. Census, The Conference Board and NRF’s own calculations. NRF’s spending survey is not a part of the Shop.org forecast.

 

 

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