Despite Obstacles, Consumers Will Still Spend This Holiday Season

Consumers intend to spend slightly more this holiday season than last, despite recent issues such as gas and oil prices. In this year’s edition of NPD’s annual holiday survey, consumers said they plan to spend an average of $681 this year, compared to the $655 they intended to spend last year.

“Holiday ’05 will be remembered as the year of giving to those in need,” said Marshal Cohen, NPD chief industry analyst. “This holiday we will see more individuals giving to the needy and buying products where the proceeds go to charities,” he said.

Twenty-four percent of consumers surveyed said the price of gas and oil will have a great impact on how much they will spend on gifts this holiday season. Thirty-one percent said gas and oil prices will have very little to do with the amount they spend. And boding well for retailers, 34 percent of consumers surveyed said the price of gas and oil will have no impact on their holiday spending.

The survey results show consumers once again will spend most on clothing, toys, movies (DVD and VHS), consumer electronics and technology and books, in that order. “This holiday season, we expect consumers to increase their spending on beauty products such as fragrance, skincare and makeup; sports equipment; apparel; footwear; computer peripherals; and video games,” Cohen said.

2005 Holiday Spending Intentions
	Bought 2004	Plan to Buy 2005
Clothing	67%	61%
Toys	51%	47%
Movies	45%	40%
Books	40%	38%
Music	33%	34%
Jewelry	32%	29%
Home/Holiday Decorations	26%	21%
Fragrances	25%	24%
Video Gaming System/Games	24%	23%
Food	22%	21%
Housewares	18%	14%
Source: The NPD Group/NPD Holiday Survey 2005/consumer information

Gift cards will continue to play a key role this holiday season, with nearly 40 percent of consumers telling NPD they will buy a gift card or gift certificate. There is reason to believe that number will grow, as another 42 percent said they are undecided about whether they will purchase gift cards this year. According to last year’s survey results, 36 percent of consumers told NPD they would purchase a gift card; 49 percent actually did.

It is no surprise that value and price continue to be important factors when it comes to where consumers will shop for holiday gifts.

When NPD asked consumers when they will begin their holiday shopping, 45 percent said they would start before Thanksgiving; 41 percent said they will be finished with their shopping by early December. Thirty-two percent said they would wait until the last minute. “Retailers will continue to try to expand the holiday selling season by pushing holiday earlier, and consumers will likely wait a bit longer to shop than retailers hope for,” Cohen said.

“The added dynamic this holiday for consumers will be the higher fuel prices and higher heating expenses we’re seeing in the market now. Despite these challenges, retailers will fare well this holiday season and consumers will not let these distractions spoil their holiday shopping spirit,” he said.

The NPD Holiday Survey was fielded September 12 to September 19, 2005. The findings presented here are based on responses from 2,116 completed interviews by members of NPD’s online consumer panel.