This holiday shopping season will be a cheerful one. At least that's what consultancy Deloitte & Touche found in its 19th Annual Consumer Holiday Survey of retail-spending plans and trends, conducted Oct. 13-25. This year's report is based on a poll of 15,593 consumers and has a margin of error of plus or minus 3 percentage points.
On average, consumers plan to spend plenty on stocking stuffers, under-the-tree goodies, and feasting -- about $1,715 on the holidays. Of that total, 37% will go toward gifts, 23% to socializing away from the home, 15% to entertaining at home, 14% for non-gift clothing items, and 11% for home and holiday furnishings, according to the survey data. Respondents also said that, after Dec. 25, they would spend 12% of their holiday budget to take advantage of post-holiday sales.
But some feel more secure than others about counting their blessings this holiday season, the survey reveals. Of those with households earning $100,000 or more, 64% said they feel very secure with their jobs. Only 41% of those from households earning less than $30,000 said they feel very secure with their jobs.
While just 28% of high-income consumers say escalating gasoline prices would cause them to spend less than during last holiday season, 53% of lower-income consumers said they would spend less. Likewise, 17% of upper-income respondents said rising health-care costs would cause them to spend less vs. 35% of low-income respondents.
BusinessWeek Dallas bureau correspondent Stephanie Anderson Forest recently spoke to Tara Weiner, vice-chairman and national managing partner of the consumer business industries practice at Deloitte & Touche, to discuss the retail outlook for holiday 2004 and the recent survey results. Edited excerpts from their conversation follow:
Q: What's Deloitte & Touche's outlook for the 2004 holiday shopping season? A: We're cautiously optimistic. We're seeing some really good economics that put a lot of cash in the wallet. A lot of the spending last [holiday shopping season] was due to incentives, such as tax cuts, lower interest rates, and refinancing activity. This year, good economics are driving cash in the wallet. We have added 1.9 million-plus new jobs [so far this year], wages are up, wealth is up, and income is up. We're looking for overall [non-auto] holiday sales to grow about 6% vs. a 6.6% rise last year. So, there's no scrooge in holiday 2004.
Q: How is consumer sentiment going into the holiday shopping season? A: There is somewhat of a split between upper- and lower-income groups in their outlooks for this holiday season. We're calling it a tale of two consumers. Lower-income consumers are very concerned about high oil and gas prices, rising health-care costs, and job security. So, that continues to affect their willingness to spend.
Q: What does this data mean in regard to how certain retail sectors will fare over others? A. The luxury-goods retailers should do very well. Conversely, the lower income groups' concerns may present challenges for discount retailers.
Q: What were some of the other key findings of the survey? A: For the first time, gift cards edged out apparel as the top gift choice. Gift cards are now seen as an accepted and personal gift. The consumer has said, "It's not bad to use the gift card to pick out the sweater I really want" instead of having to insult the gift giver. But primarily, it's about convenience -- spending less time to buy it, wrap it, and deliver it.
Gift cards are growing across all demographics and all channels. I think this is a phenomenon that's got some staying power.
Q: How does the growing popularity of gift cards affect retailers? A: The gift-card phenomenon comes with some fascinating fundamentals for retailers. For one, it places added importance on January retail sales as shoppers redeem their cards. So, January is no longer just a month for clearance. Also, the retailer gets the cash flow from the purchase of a gift card, but he doesn't get the revenue until the consumer uses the gift card.
In the October  survey, we found 28% of gift cards from holiday 2003 were still not fully redeemed. I think unused cards represent an interesting opportunity for retailers to consider new ways of enticing these gift-card holders into their stores. With the increasing popularity of gift cards, retailers will be well served by launching gift-card redemption campaigns, as they are unable to report the sale until the card is redeemed.
Q: What role will Internet shopping play in holiday 2004? A: The Internet continues to play a major role in the holiday season. Twenty-four/seven convenience is the No. 1 reason consumers shop the Internet.
Q: Any other interesting findings from the survey? A: Yes: fewer stores and greater spending per stop. This really compels the retailer to get it right the first time. Shoppers are looking for retailers to accommodate their [busy] lifestyles by creating a total shopping experience that allows them to save time. Retailers are going to have to focus on making sure they have the right products, the right sizes, and the right prices to capture the maximum share of the consumer's wallet. Fewer visits mean less opportunity to sell to a consumer, so retailers should focus on getting it right the first time.
Q: Do you expect retailers to be as promotional this year as in some years past? A: No. In recent years, retailers have deployed really good technology so that they have good inventory on hand. So, you're not going to see the kinds of promotions retailers used to have in the past where they were so overstocked that they had to take huge markdowns. I think there will be appropriately planned promotions.
Edited by Amy Tsao