Today's post is a roundup of recent consumer research and forecasts on how much consumers expect to spend, what they're looking for and where they plan to get it. It's interesting but not surprising how some results really vary and even contradict each other (e.g. gift cards are hot, gift cards are not).
This research can't make decisions for you but it might help you think through your customer segments (and personas) and consider how different types of consumers (what motivates them in a tough economy) experience your site/email offers and messaging.
For example, if you are Musician's Friend and your customer typically buys music supplies for themselves -- if gift givers love to give apparel and gift cards, you might market to your existing customer pushing those items along with an incentive like a gift card rebate to use for themselves in the new year.
Will shoppers spend more or less this year?
- 26% of consumers plan to spend less, 11% expect to spend more, and 63% about the same. “For the first time I am predicting flat to declining sales for the holiday season,” stated Marshal Cohen, chief industry analyst, The NPD Group, Inc. NPD Group Holiday 2008 Survey
- 35% plan to spend less, 6% will spend more this year, 50% the same. Nielsen, October 2008
- 45% will buy less, up from 20% last year. Forrester Research, October 2008
- 59% will spend less, citing food prices (73%), energy prices (69%) the economy (61%) and job uncertainty (18%) as reasons. 11% are still paying off last year's holiday purchases. Deloitte, October 2008
- 52% plan to buy fewer gifts, an average of 11-15 gifts compared to 16+ last year. e-tailing group, October 2008
- Over 91% plan to purchase the same number or somewhat more gifts online; that’s equal to last year’s levels. e-tailing group, October 2008
How important is price?
- 83% of consumers report that price will influence their gift buying. e-tailing group, October 2008
- 60% say that lower prices, sales and special values will dictate where they shop (surveyed mid-September before the stock market's major downturn). NPD Group, September 2008
- 70% will shop sale items more often and 53% have become less brand loyal in favor of less expensive brands. Morpace, October 2008
- 73% will shop where they can find the best value for their money. 72% will look for low prices. Convenient location, quality and selection of merchandise, and customer service/experience all ranked lower. Deloitte, October 2008
- 66% will use coupons and spend more time shopping around for bargains. Consumer Electronics Association
How important is free shipping?
Free shipping (95%) and sales/specials (83%) top of the list of what influences online gift buying. e-tailing group, October 2008
- The No. 1 customer reason for not buying more online is the high cost of shipping (78%). e-tailing group, October 2008
- 75% prefer to shop with online retailers that offer free shipping. 58% claim that shipping prices deter them from shopping online. Forrester Research, October 2008
More than 40% of people who abandoned their online shopping carts said they did so because of high shipping costs, according to a recent survey by the online payment company PayPal. Nearly 60% of those polled by BIGresearch said free shipping was a "very important" factor in their decision to shop online. The National Retail Federation's digital division, Shop.org, says eight out of 10 online retailers offered free shipping during the past two holiday seasons, up from about 60% in 2004.
Source: Despite higher fuel costs, retailers cut shipping rates USA Today, September 2008
What items to shoppers want to give / receive?
"[Sunglasses] are the most sought-after item by young adults and will surely be their most desired gift," it says--particularly those with large logos. "Sunglasses will be this year's handbag." NPD Group, October 2008
Source: Outlook For US Online Holiday Sales, Forrester Research, October 2008
- Consumer electronics comprise four of the top 10 items on adults’ holiday gift wish lists along with computers, televisions, video game systems and cell phones. Nearly 80% of adults and 84% of teens expressed interest in receiving a consumer electronics product as a gift. 28% of the total holiday budget is being allocated for CE purchases, an increase of 6% from last year’s holiday season. Consumer Electronics Association
- 66% plan to buy gift cards, the top gift purchase for the 5th straight year, slightly below last year's 69% but will buy fewer cards on average: 5.3 cards compared to 5.5 in 2007, and will spend $28.43 per card this year vs. $36.18 last year. There's a trend toward less store/product cards and more gasoline cards than last season. Deloitte, October 2008
- 24% of consumers plan to increase their spending on gift cards, the restaurant/fast food category outselling all others. 50% consider purchasing a gift card if it comes with a coupon/discount for themselves. Archstone Consulting, October 2008
- There are few "must-have" gifts this year, compared to last year where many retailers used GPS systems as door-busters. NPD Group Holiday 2008 Survey
Which categories are on the decline?
- Gift cards are losing popularity, 38% will purchase this year vs. 49% who did purchase last year. NPD Group Holiday 2008 Survey
- Department stores and retailers of electronics, toys, home improvement supplies, and office supplies are likely to feel the brunt of the economic slowdown as consumers shift their purchases to more value-oriented retailers. Nielsen, October 2008
- Almost 25% expect to spend less at department stores than last year. Morpace, October 2008
- Home improvements and home/holiday furnishings are most likely to decline from last year. Deloitte, October 2008
Will shoppers use the online channel?
- 27% expect to spend more online this holiday season than last year. Forrester Research, October 2008
- Online retailers, dollar stores, grocery stores, supercenters, mass merchandisers, and club stores are expected to attract the lion’s share of holiday spending, as consumers seek to minimize the number of shopping trips they make — and find good values. Nielsen, October 2008
- 72% are planning to research products online prior to purchasing vs. 65% in 2007. e-tailing group, October 2008
- 49% of adults who shop online four or more times per year, spending at least $500 annually, will buy gifts online, compared with 44% who plan to do so in-store. e-tailing group, October 2008
- Reasons for shopping online are saving time (88%), locating hard-to-find products (84%), greater selection (83%) avoiding crowds (83%) and saving money (80%). e-tailing group, October 2008
- Reasons for shopping online: find unique products not available elsewhere (61%), comparison shopping (52%), find the best values and deals (48%), high gas prices (36% vs 22% last year). Forrester Research, October 2008
We'd love to hear your thoughts in the comments - does research like this influence your marketing strategies? Should they just be taken with a grain of salt?