"It appears retailers can expect roughly the same number of shoppers as last year on the day after Thanksgiving," said Tom Krause, director of strategic consulting for Maritz Research Retail Group. "However, they will definitely be spending less and will be more deal sensitive than ever. In order to capture as much of that spend as possible, retailers need to help their shoppers feel savvy by having the product available, easy to find and at the deep discount shoppers are desperately seeking on Black Friday."
Kraus adds, "Given consumers' sour mood this year, the in-store experience will need to be as hassle-free as possible."
According to the survey, shoppers plan an average total spend of $546 this year, which is a 14 percent decline compared to $637 from the 2007 Maritz survey.
Who's taking more of a cue from Scrooge?
Results from the poll revealed significant differences among gender, generations and income levels.
Men plan to spend an average of $518 this year - a 19 percent decline from the $642 spent in 2007. They are also spending an average of $50 less than women this year, a significant change from last year when both said they would spend the same amount.
"Retailers, who tend to attract males during the holiday season, such as electronics stores and jewelers, may be more vulnerable to the effects of the economy, said Krause. "We're anticipating a decline in the amount of money men are willing to spend this year, and those retailers will have to fight harder to capture the attention and the wallets of their customers. Also, marketing will be critical this year because even men will be open to communication about where the best deals are."
Gen X shoppers say they will spend the most this year ($607), and the Silent Generation shoppers anticipate spending the least ($489). Based on the poll findings, all generations plan to spend less than last year, except for Gen Y shoppers, who say they will spend the same as last year ($550)
But who's truly changing their holiday shopping habits the most in this declining economy? According to respondents, those with an income between $75,000 and $100,000 are reporting the biggest change in spending compared to the 2007 survey. This year, they're averaging a 41 percent decrease in spending ($678 compared to $1,152 in 2007). Last year, those in the same income bracket planned to spend as much as those with a household income of $100,000 or more.
"This is an important category for retailers and their belt tightening is driving some upscale stores, who historically have not had a discount strategy around the holidays, to get more aggressive with pricing," said Krause.
Santa's List Just Got Smaller
Given the nature of the economy, consumers have been taking steps to offset their holiday shopping costs. When asked about activities that respondents have engaged in or plan to engage in:
- Four out of five (80 percent) respondents indicated that they are buying items only when they find a sale.
- Nearly three out of four (74 percent) cited doing pre-shopping research to score the best deals.
- Seven out of ten (70 percent) purchased gifts prior to the season.
- 65 percent of respondents admitted to cutting back on the number of gifts per person.
In addition to the 65 percent of respondents, who admitted to cutting back on the number of gifts per person, nearly 60 percent of all respondents also admitted to cutting back on the number of people on their holiday shopping list, and two-thirds of those cutting back say that someone in their extended family will be left off the list this year. Of those cutting back, 67 percent will eliminate extended family (including aunts, uncles and cousins) and 55 percent will eliminate friends.
Not as gaga for gift cards?
Retailers may expect to move less inventory this holiday season, but does the same hold true for gift cards? According to the poll, 55 percent of respondents still plan to purchase gift cards this year (compared to 56 percent in 2007 and 54 percent in 2006). The number of gift cards purchased will also remain the same as last year (with a median of four gift cards each year). But the true difference is in the amount spent on each gift card. The average spend on gift cards dropped to $161 from $273 in 2007. Based on the projected overall spend this holiday season, approximately 29 percent of gift giving will involve gift cards, compared to 43 percent last year.
"Despite the planned decrease in spend on gift cards, retailers should keep a good supply of gift cards in stock. Because many retailers are scaling back on their inventories this year, gift cards can act as a good option for customers who don't want to drive elsewhere," said Krause. "Train your employees to offer gift cards to those customers who can't find the item they want. These small steps can improve the customer experience and allow retailers to remain competitive in this tough market."
Value-based retailers may be merrier
Among a list of more than 15 stores to choose from, the consumer research study revealed the top choices among the generations (listed in descending order of popularity):
"By far, people are going to spend the majority of their budget at big-box retailers. Big-box retailers have a distinct advantage because they typically offer competitive prices and one-stop shopping," explained Krause. "Shoppers are going to be choosier than ever, and other categories need to identify ways to provide the most value through discounts, value-added benefits such as free shipping or an added level of convenience, in order to capture their share of holiday dollars."
