Retailers Prepare for Careful, Controlled Holiday Spending

This holiday shopping season will be dominated by the ‘precision shopper’ as 72% of U.S. consumers will be consciously minding their budgets according to the latest annual Accenture Holiday Shopping Survey.

Accenture projects that discretionary gift spending this holiday will be consonant with the strains on consumer’s wallets and economic concerns. ‘Extravagant’ or ‘unrestrained’ spending is planned by only 6% surveyed while 24% expect a ‘thrifty’ holiday season with one in five (18%) ‘focused on necessities.’

While 88% plan to spend the same or less than last year, a spike from shoppers with income exceeding $100,000 (71% of respondents) expect to spend at least $500 on gifts in a segmented boost for retailers. 

“This holiday season will see the balance of power continue to tip in favor of the consumer,” stated Janet Hoffman, managing director of Accenture’s retail practice. “‘Precision shoppers’ will dominate. They will be very targeted about where and what they buy, and will be more inclined to shop around for the best value.”

As retailers gear up to battle behemoths such as Walmart, a significant swerve factor in anticipated shopping behavior is consumer’s use of smartphones to compare prices online while in-store, with 54% saying they’ll do so and 35% of tablet users doing the same.

Consumers expecting to buy more than half of their holiday gifts online rose from 41% in 2010 to 59% this year due to factors including: free shipping (74%), better discounts (60%) and avoiding crowds (47%).

Retailers’ “response should be driven by the use of customer segmentation to provide them with a detailed picture of what their customer is looking for,” added Hoffman. “Mobile devices for sales associates are also useful tools for enabling a real-time, in person experience with customers that is as good as, and often better, than that enjoyed by mobile shoppers.” 

While discount stores remain the most popular holiday shopping destinations, the number of estimated shoppers is down to 73% this year compared to 81% last year and 85% in 2009.

This year's “Black Friday” turnout — the traditional shopping spree on the day after American Thanksgiving (speaking of which: happy Thanksgiving to our Canadian readers!) — is projected to be the lowest in three years; 44% polled are likely to shop on Black Friday 2011 compared to 47% in 2010 and 52% in 2009

Of those spending less this year 4% say it’s due to less discretionary income, 30% have less savings, and 37% have increased living expenses. Rising food bills (46%), gas prices (41%), the economy (39%), and home energy bills (38%) are the major contributing factors while 17% fear losing their job or a recent job loss.

Specialty retailers such as toy or apparel shops saw a decline from 36% in 2010 to 29% this year as did electronic goods retailers at 29% vs. 33% in 2010, while department stores and online-only retailers maintained status quo. “High performing department stores have retained a keen focus on promotions that are carefully targeted to hit their customers’ value buttons,” says Hoffman.

Topping holiday shopping lists are: apparel (54%), toys (36%) and gift cards (57%), with average spend more than $75 per card. Devices like MP3 players, tablets and smartphones are high on the list for 36% of respondents looking to buy one or more.

‘Door-buster’ deals are a thing of the past as 60% of shoppers will look for a discount between 20-49% vs. 62% in 2010.

The National Retail Federation says the 2011 holiday season can be summed up in one word: average. “Persistently high unemployment, an erratic stock market, modest income growth and rising consumer prices are all combining to impact spending this holiday season,” said NRF Chief Economist Jack Kleinhenz.

“How Americans will react to shaky economic data is the question, but the good news for retailers is that shoppers have not yet thrown in the towel.”