As Retailers Dream of a Jolly Holiday Season, Consumers Tell NPD They Plan to be Thrifty

Men and Young Adults May Be Bright Spots for Retailers

Our new survey of consumer holiday buying intentions reveals that the 2004 holiday shopping season could be challenging for retailers. Nearly nine out of ten consumers say they are planning to spend the same amount or less than last year.

“Year over year, it appears from our surveys that consumers are slowly but surely losing their passion for holiday shopping,” said Marshal Cohen, chief industry analyst for The NPD Group. “But that doesn’t mean merchants should lose heart – we are seeing some important growth opportunities. It’s up to the retailers to be vigilant and proactive. Those merchants who will ignite the consumers’ interest will thrive and those who repeat what they’ve done in the past will simply survive,” said Cohen.

Men and Young Adults Could Drive the Increase in Spending
Consumers age 55 to 64 plan to spend the most this holiday season ($693) and young adults plan to spend the least. But the young adults could be the ones to stuff retailers’ stockings this year. On average, consumers 18 to 24 years old expect to increase their holiday spending dramatically from an average of $366 last year to $537 this year. By comparison, adults age 25 to 34 plan to cut their spending by 21 percent over last year.

Men tell NPD they plan to spend more than women this year with an emphasis on electronics. Of all the respondents, on average men will spend $666 this holiday versus $624 for women and they say they’ll spend twice as much as their female counterparts on electronics. “That’s why marketing can make a big difference,” according to Cohen. “It pays to look for marketing opportunities within particular demographic segments and implement targeted strategies to entice them to buy.”

This holiday season, consumers say they will shop more in discount stores, warehouse clubs, outlets and online merchants than at other types of retailers. Seventy-two percent of consumers plan to shop this holiday season in discount stores such as Kmart, Target and Wal-Mart. Thirty-three percent of consumers plan to shop in warehouse clubs and 26 percent of consumers will shop in department stores. One-third of consumers tell NPD they will shop at toy stores this year.

Online Retailers Expected to Ring Up Sales
Shopping from home remains a popular option for consumers in 2004. Forty-one percent of men and women plan to buy holiday gifts online. The NPD Group’s Holiday Survey finds higher income consumers and 25-44 year olds will be driving online spending. More than half of the consumers who say they will shop online have higher incomes of more than $75,000 a year. Catalog shopping, however, is still preferred by more women than men. Thirty-three percent of women said they plan to shop via catalog/mail order this holiday season, compared to 26 percent of men.

Value, Convenience and Quality
The NPD survey also asked consumers about the influences that affect them when they shop. Value, convenience of location and quality of products were the top three reasons consumers shop where they shop. A majority of consumers (56 percent) plan to comparison shop before buying and one in three will wait for sales to begin. Consumers tell NPD that price drives their purchases when it comes to electronics much more than it does for clothing and computer software.

“Consumers have come to expect that much of what they buy for the holidays will be on sale. Overall, consumers report being slightly less value conscious than they were last year, but they will continue to look for bargains, since they’ve been trained over the years to buy on sale," Cohen said.

While it seems retailers push holiday sales earlier each year, this year fewer consumers report having already begun shopping. NPD’s survey finds that 27 percent of consumers had already started shopping versus 31 percent who reported starting early in 2003; another 24 percent plan to begin prior to Thanksgiving; just seven percent will begin Thanksgiving weekend. Four percent say they will wait until the last minute to begin their holiday shopping, but 32 percent expect to do at least some of their shopping at the last minute.

Source: The NPD Holiday Survey was fielded September 8 to September 17, 2004. The findings presented here are based on information from 2,372 completed interviews of members of the NPD’s online consumer panel.