The NPD Group released the results of its survey of consumer holiday buying intent, which confirms that this holiday shopping season could be just as challenging for retailers as last year, because consumer shopping excitement remains chilly. While 68 percent of American consumers indicated they plan to spend the same amount this holiday as last year, 19 percent of consumers indicated they plan to spend less this year and only 13 percent plan to spend more than last year.
“Following last year's lead, consumers view shopping as an irksome chore to get through, rather than an exciting part of the overall season of goodwill and giving,” said Marshal Cohen, chief industry analyst, The NPD Group. “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?'”
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 2003 – 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 list “value” as a top consideration, while 76 percent of men feel 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.”
NPD's holiday survey shows a significant drop in the number planning to shop in Discount Stores, such as Kmart, Target and Wal-Mart, this season (74 percent) versus those surveyed last year (79 percent). There were also decreases in the number of consumers planning to shop at National Chains (44 percent this year vs. 51 percent last year), Warehouse Clubs (32 percent vs. 36 percent), Department Stores (27 percent vs. 33 percent) and Computer/Office Stores (13 percent vs. 18 percent).
Only a few retail store channels showed slight increases in consumer purchase intent. These channels include home and specialty stores, which showed a purchase intent increase from 21 percent last year to 23 percent this year, and electronics stores, which increased from 31 percent last year to 32 percent this year. In addition, the percentage of consumers planning to shop online increased a single percentage point to 41 percent this year.
Shopping Earlier – Finishing Later
Fifty-one percent of consumers say they will begin their holiday shopping before Thanksgiving, but just two percent report that they plan to brave the stores on the “Black Friday” weekend following Thanksgiving, which is traditionally the largest shopping weekend of the year. 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 the NPD Online Panel.
