Holiday Shoppers Eyeing Internet To Find Bargains

The National Retail Federation said 2008's estimated 1.9% growth in holiday spending is the lowest planned increase in consumer spending since its survey began.
This holiday season will be challenging, but the Internet is likely to play a key role in spending, according to results of a survey released Thursday.

The National Retail Federation reported that its 2008 Holiday Consumer Intentions and Actions Survey found that U.S. consumers plan to spend just 1.9% more this year on holiday shopping than they did last year.

The survey, conducted by BIGresearch, said consumers plan to spend an average of $832.36, up from last year's $816.69. The percentage is the lowest increase in planned consumer spending since NRF began taking the annual survey in 2002. Shoppers said that they would base their choice of stores on price more than anything else, and the NRF expects holiday sales to rise by 2.2% to $470.4 billion.

According to the survey, 40% of shoppers said sales and promotions will play the biggest part in determining where to shop, while 12.6% said everyday low prices are the most important factor in choosing where to spend.

Just over 21% of respondents rated selection as the primary factor, while 13.4% cited quality. Less than 6% said they would base decisions on a convenient location, while just over 5% cited customer service as a factor.

"Retailers are going into this holiday season with their eyes wide open, knowing that savings and promotions will be the main incentive for shoppers," NRF president and CEO Tracy Mullin said in an announcement. "No one is canceling Christmas because money is tight, but consumers will be sticking to their budgets and looking for good deals when deciding where to spend this holiday season."

Gift giving will continue to account for the largest portion of shoppers' budgets, with the average person spending $466.13 on gifts for family members, $94.52 on friends, $26.70 on co-workers, and $43.50 on other gifts.

For the first time since the survey's inception, people said they planned to spend less on family members. (Last year's average was $469.14.)

"It might not be easy to pull back on small gifts for a co-worker or a child's teacher, but consumers feel like their family understands their current situation," Phil Rist, VP of strategy for BIGresearch, explained. "Americans might eliminate an extended family gift exchange or buy one big present for all of the kids to compensate for a budget-friendly Christmas this year."

The survey predicts that spending by young adults, ages 18 to 24, will be particularly weak, as they plan to spend $50 less on gifts than last year.

On average, shoppers plan to spend $51.43 on decorations, $32.43 on greeting cards and postage, $95.04 on candy and food, and $22.61 on flowers.

More than 40% of consumers said they plan to begin holiday shopping before Halloween, a trend that continues from previous years. NRF said that reflects bargain hunters' desire to spread out spending.

Nearly 70% of shoppers said they plan to make some holiday purchases at discount stores, while 58% intend to shop at department stores, and 37% said they plan to shop at clothing stores. Just over 37% said they plan to shop at electronics stores.

NRF expects the percentage of people shopping online (about 44%) to remain flat this year, yet the influence of the Internet on shopping could increase this year over last. The survey predicts that the Internet will affect 33.6% of holiday purchases, up from 30.2% last year, and up from 28.9% in 2006.

Many who do engage in e-commerce do so to compare prices, research retail locations, and seek ideas before visiting stores. "Shoppers will rely on the Internet more than ever to browse for holiday gifts and research products," the NRF explained.

Nearly 57% of shoppers plan to buy for themselves and make non-gift purchases for their families during the holiday shopping season. Some may have held back on personal purchases for the last few months to take advantage of holiday sales. Shoppers are likely to spend an average of $119.83 on these purchases, up from $106.67 last year, according to NRF.

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