Consumers to Spend $816 this Holiday Season

Though shoppers still plan to spend more on the holidays this year than last, consumers say their spending will be a bit restrained this holiday season, according to a National Retail Federation survey.

U.S. consumers plan to spend an average of $816.69 on holiday-related shopping, according to NRF’s 2007 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch. In addition, these shoppers will spend an additional $106.67 on special “non-gift” purchases by taking advantage of special promotions and discounts to treat themselves. This brings total planned holiday-related spending to $923.36, an increase of 3.7 percent from 2006 and in line with NRF’s economic forecast of 4 percent.

“Shoppers will be a little more conservative with their spending as they become more aware of the softness in the economy,” said NRF president and chief executive officer Tracy Mullin. “It is safe to say that many retailers will be competing on price, causing this holiday season to be very promotional – a tremendous win for consumers.”

While the traditional kickoff to the holiday season is Black Friday, most people won’t wait to begin bargain hunting. This year, 40.3 percent of shoppers will begin holiday shopping before Halloween.

“Although the day after Thanksgiving remains the official kickoff for holiday shopping, consumers are out in the stores far earlier looking for holiday gifts,” said Phil Rist, vice president of Strategy for BIGresearch. “Retailers that are promoting holiday merchandise are responding to the needs of their shoppers, who are already looking to purchase greeting cards, wrapping paper, and a variety of gifts.”

Though consumers plan to shop at a variety of stores this year, no particular format will see significant traffic gains from last year. Discounters can expect the most traffic as 68.4 percent of consumers plan to shop there (compared to 70.3 percent in 2006). Department stores will also see a lion’s share of traffic as 58.2 percent will choose this format (vs. 61.6 percent last year). Other popular destinations include grocery stores (44.6 percent in 2007 vs. 49.3 percent in 2006) and online (44.3 percent in 2007 vs. 47.1 percent in 2006).

The Internet will once again play a crucial role for retailers this holiday season as consumers, on average, plan to do 30.2 percent of their shopping online compared to 28.9 percent in 2006.

As expected, most holiday budgets will be allocated to gifts, with the average person spending $469.14 on family, $90.13 on friends, $22.79 on coworkers, and $37.45 on other people like clergy, teachers, and babysitters. The survey also found that most Americans plan to increase spending on flowers ($20.53 vs. $18.98 last year) and decorations ($49.76 vs. $46.49 last year). Consumers also plan to spend $94.69 on candy and food and $32.21 on greeting cards and postage.

There will be plenty of popular items on consumer wish lists this holiday season, but the most sought-after category appears to be the most practical: gift cards. This year, more than half (53.8 percent) of consumers want to receive a gift card or gift certificate as a holiday gift, though they won’t be the only item on shoppers’ wish lists. Consumers also want everything from clothing and accessories (50.1 percent) to books, CDs, DVDs, videos, and video games (50.8 percent).

Other popular categories include consumer electronics or computer-related accessories (36.4 percent), jewelry (23.8 percent), and home décor or home-related furnishings (22 percent).

Though shoppers choose to buy in stores for a variety of reasons, two major factors will be driving consumer traffic this holiday season. The majority of shoppers continue to say that everyday low prices (12.8 percent) and sales or price discounts (38.2 percent) bring them into the stores. Though this will be a promotional holiday season, other factors like customer service (4.9 percent), product quality (12.8 percent), and merchandise selection (22.6 percent) will help retailers drive traffic. Additionally, 6.3 percent of shoppers said they choose to shop at stores with the most convenient location.

NRF continues to expect holiday sales to increase 4 percent to $474.5 billion.