This holiday season could be just as challenging for retailers as last year’s holiday period, according to NPD’s annual survey on consumer holiday buying intent. The survey reports consumer shopping excitement likely will remain chilly through the holidays, illustrated by the 68 percent of U.S. consumers who plan to spend the same amount this holiday as last year. Nineteen percent of consumers plan to spend less this year than last year and only 13 percent plan to spend more than last year.

"In the past consumers were driven to stores early to find hot items and those that were hyped as especially difficult to find, which drove purchases of other products, as well. Lately we've seen an absence of retailer-led product crazes, leaving consumers to wonder, 'where are the Furbies and Pashmina shawls of years past?'", said NPD Chief Industry Analyst Marshal Cohen.

On average, survey respondents plan to spend $637 this holiday season. Consumers with combined household incomes under $25,000 annually plan to spend $353. Spending increases to $468 for those with household incomes of between $25,000 and $44,999 and to $653 for those with household incomes between $45,000 and $74,999. Consumers earning $75,000 or more plan to spend $945 this year.

Consumer Purchase Intent
According to the survey, consumer purchase intent for most categories is similar to last year. This year 66 percent of respondents say they will buy clothing and 53 percent plan to buy toys. Thirty-nine percent of consumers will purchase music this year, 43 percent plan to purchase books, 26 percent will buy fragrances and 21 percent plan to purchase housewares. In addition, 12 percent of NPD’s survey respondents plan to purchase electronics this year and six percent expect to buy cameras.

Said Cohen, "far from being a boon to shopping, the current ease with which consumers can find, and purchase, products on sale has actually had a negative effect on spending overall. When even the hottest products are widely available at a discount, much of the excitement of purchasing a high-ticket item is removed from the shopping experience."

Consumers Shopping for Value – Not Price
The NPD survey also asked consumers about the factors influencing where they will shop over the holidays. "Value," "convenient location" and "quality of products" were cited as the top three influences on consumers’ decisions about where to shop this year. Eighty-two percent of females listed "value" as a top consideration, while 76 percent of men felt similarly.

"’Value’ is a highly misunderstood concept that is often mistaken for ‘low price’," Cohen said. "While consumers are shopping for value, they are not necessarily looking for items on sale. Rather, they’re looking for gifts that are worth the money spent. Retailers have lately taken to discounting products throughout the holiday season, which appears to have had the unintended effect of removing the thrill of the bargain hunt."

Shopping Earlier – Finishing Later
Fifty-one percent of consumers say they will begin their holiday shopping before Thanksgiving. One-third of consumers report that they will still be shopping at the last minute regardless of when they first start shopping. In addition, just over a third of consumers (38 percent) plan to finish their shopping by early December, and five percent of shoppers will wait until the last minute to begin shopping.

"When everything is available and everything is on sale, consumers have little incentive to shop early or to take the time to search for that perfect one-of-a-kind gift," Cohen said. "‘Black Friday’ has become less of an event for shoppers year over year. It’s time for merchants to put the fun back into holiday shopping and to provide real incentives to buy."

Taking Back the Retail Reins –
Prescriptions for Seasonal Malaise
According to Cohen, retailers and product manufacturers can counter the current consumer holiday shopping malaise by following a few guidelines:

1. Educate consumers – Provide them with reasons for shopping early in the season.
2. Focus on the "must-have" product – Every product category should market one item that becomes the de facto "must-have" item for the holiday shopping season.
3. Market to a lifestyle or demographic segment – Creating store areas that display products for a particular segment of gift recipients (e.g., "Gifts for Mom"), can help guide customers toward key inventory.
4. Market to the gift-giver, too – Twenty-nine percent of purchases made over the holidays are for the shopper, not the gift recipient. Among 18 to 24-year-olds, that percentage increases to 37 percent.

Methodology: The NPD Holiday Survey was fielded September 15 to September 22, 2003. The findings presented here are based on information from 2,403 completed interviews of members of NPD’s online consumer panel.

To purchase tabulated results of the 2003 NPD Holiday Buying Intent Survey, please contact your NPD account representative or e-mail info@npd.com.