Survey says: Increased holiday spending and internet shopping in 2011

Since 20 percent of annual sales depend on holiday spending, it’s no wonder there are numerous surveys conducted to check the buying pulse of the American public. The trend appears to be a flat to a slight increase in spending in 2011 despite a rocky economic year. However, Halloween sales increased 5 percent this year which could indicate a stronger 2011 holiday season.

The most positive prediction comes from the National Retail Federation (NRF), which expects that holiday sales will increase 2.8 percent this year over 2010. According to NRF, only 2008 and 2009 saw declines in holiday purchases and the average sales increase for the past decade has been 2.6 percent. If the projections prove correct, consumers will spend $465.6 billion on gifts.

“Just when you think the U.S. economy is turning around, another factor comes into play that changes the game,” said NRF Chief Economist Jack Kleinhenz, Ph.D. “Persistently high unemployment, an erratic stock market, modest income growth and rising consumer prices are all combining to impact spending this holiday season. 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.”

Interestingly, NRF had predicted a lower sales year until a few weeks ago when it revised its predictions, citing better than expected economic growth and a slight increase in employment.

Surveys by Deloitte and Gallup, conducted in September and October, indicate about the same spending for 2011 as 2010. Deloitte found 42 percent intend to spend the same or a little less while 58 percent said they would spend more. Gallup says that the average spend per consumer will be $712 which is slightly down from the $719 spent in 2010.

What all surveys indicate, without exception, is a healthy increase in online and mobile shopping as people continue to sniff out bargains and covet convenience. The Deloitte survey found that 51 percent of consumers will use the internet to shop this year, a 10 percent increase over last year. 27 percent of those will use mobile devices and a whopping 44% intend to use social media.

“Double-digit growth in the non-store channel has given the industry a major boost, and retailers that put online channels to work for their physical storefronts have the advantage,” said Alison Paul, vice chairman, Deloitte LLP and U.S. retail & distribution sector leader. “The brick-and-mortar store is still central to the shopper experience. Retailers that integrate the power of the sensory experience in-store with relevant, timely information via their websites and mobile applications are well-positioned to lead the way this holiday season.”

NRF says that online shoppers will spend 22 percent more than their non-techy counterparts. When asked why they plan to spend more online this holiday season, four in 10 shoppers (43.2 percent) said 24-hour convenience is a main consideration. More shoppers this year are also interested in shopping online as a direct result of free shipping offers – 36.3 percent will spend more online this year if shipping comes free. Other reasons include their lack of desire to fight crowds in the stores (37.2 percent) and the ease of comparing prices (29.6 percent).

Affluent Americans, of course, will lead the pack both in spending and internet usage. The Survey of Affluence and Wealth in America, produced by Harrison Group and American Express Publishing, found that the top 10 percent of American wage-earning households are expected to account for 23 percent of the total 2011 holiday spend this season. Expenditure on gifts will be up 7 percent (to an average of $2,708) among those at the very top of the income spectrum, with discretionary incomes of $250,000 or more. 41 percent of those with incomes more than $100K plan to use a mobile device to shop while only 24 percent of those earning less than $100K plan to do so.

For NRF’s survey: www.nrf.com/holidays
For the Deloitte survey: http://www.deloitte.com/view/en_US/us/Industries/Retail-Distribution/consumer-spending/index.htm