Coming so soon after last fall's near-collapse of the global financial system, the 2008 holiday-shopping season was doomed from the start. Now, with an economic landscape that features some signs of recovery alongside plenty of lousy numbers (and plenty of consumer anxiety), how can we expect 2009's holiday-shopping season to pan out? Some early forecasts suggest we'll see another less-than-robust season, though one that offers some opportunities to marketers who are in sync with the current consumer mood.
A report last week from Deloitte predicted holiday-shopping sales this year will be unchanged from last year's $810 billion, which itself was down 2.4 percent from 2007's figure. A BIGresearch survey this month found 40 percent of respondents budgeting less for gifts than they did last year, while a mere 4 percent were budgeting more. An Information Resources Inc. (IRI) report released this month suggests consumers are "more hopeful" than last year and could "selectively open their wallets wider." But its polling, fielded last month, also sees just 23 percent of respondents adopting a gift-giving budget of $800 or more, "down 13 percent from 2008."
As significant as early indications of total spending, though, are shifts in the ways consumers are likely to go about their holiday shopping -- and, hence, in the way marketers should address potential customers. As IRI's report notes, people "are taking a more strategic approach to shopping this year." And that's reflective of a deeper change in the way they view their expenditures. Thom Blischok, president of IRI Consulting & Innovation, speaks of a new "economic sobriety" in consumers who've seen their retirement funds shrink, the value of their house decline and so on. The consumer mantra now, he says, is "I really have to save more and live more conservatively."
In this environment, people will still spend money, but marketers must give them a pragmatic reason for doing so, Christmas or no Christmas. "Ads must emphasize innovative ways that gifts can be integrated into everyday life," says Blischok. "People will be buying through the lens of affordability and functionality -- 'Can I really afford it, and is it functional?'" They'll be looking for gifts that will stay in use and not get stuck in a closet after the holidays, he adds.
Nor is it strictly a matter of people having fewer discretionary dollars to toss around. "The whole movement from conspicuous consumption to conscious consumption has been permeating all levels of society," says Mary Delk, a director in Deloitte Consulting's retail practice. "Consumers are moving toward being more reflective about their spending," she says, partly in tandem with an increasing concern about "sustainability." And they want to see marketing that acknowledges this new sensibility, and isn't just talking about price. "Instead of marketing something as a low price point, they could be emphasizing that you're a conscientious consumer," she says.
Whatever their motivation, consumers will be more careful about the ways they spend their money. One reflection of this, according to IRI's research, will be widespread use of shopping lists for holiday shopping. Just 18 percent of IRI's respondents expect to do their holiday-gift shopping without a shopping list in hand --- which means it's important for marketers to get brand messages across to them before they walk into a store. And in shopping for foods and beverages for holiday entertaining, just 11 percent of respondents said they'd forgo a shopping list. "By the time they get to the store, people's minds will be pretty well made up directionally," says Blischok. That presents a challenge for in-store marketing. It can still be effective, says Blischok, if it links up with "the rest of the brand promise" as consumers have encountered it elsewhere, including online. But it can't be "in-store display just for the sake of in-store display."
One beneficiary of consumers' caution about spending will be private-label goods at the supermarket as people stock up for their holiday entertaining at home. Ninety percent of IRI's respondents said they would be using private-label goods for holiday meals, up from 87 percent last year. Blischok notes that private-label goods made big strides last year in quality, and this year they'll be "reaping the harvest" of those improvements.
As for gift giving, Delk predicts that toys and electronic games could be strong categories. In past economic cycles, she notes, expenditures on kids have been quicker to recover than spending in general. So, to the extent that there's a loosening in consumers' grip on their wallets, those kid-oriented sectors could benefit. IRI taps electronics as one of the more promising categories this holiday season, noting $100 Blu-ray players as an example. Blischok foresees strength on sales of G3 and G4 phones for gaming. He also mentions "affordable health and beauty categories," such as skincare, as sectors that could do well this holiday season. The same goes for beer and wine as people emphasize in-home entertaining, he says.
One of the dirty little secrets of holiday-gift shopping is that (when there's not a recession on, at least) people end up buying lots of stuff for themselves. In its research leading up to 2008's holiday season, though, Deloitte found a sharp decline in such "self-purchasing" -- deeper than the overall drop in holiday spending. Since self-purchases are often in the apparel category, that sector suffered last year and, says Delk, may well do so again this year.
Even if people felt like splurging for the holidays, any boost in spending on gifts and entertaining would have to run against the grain of what remains a strong inclination toward austerity in discretionary outlays. A Harris Poll, conducted earlier this month, gives a sense of consumers' basic outlook on inessential expenditures. Asked to look ahead to the next six months -- i.e., a period including the holiday-shopping season and then some -- 67 percent of respondents said they'll decrease their spending on eating out at restaurants during that period, up from 65 percent last November and 66 percent this past May. The numbers were nearly identical when the Harris respondents were asked about their spending on entertainment: 67 percent in the new poll said they'd be cutting that expenditure, vs. 64 percent in both November and May.
When the Harris Poll asked the more general question of whether respondents will "have more money to spend the way you want" in the next six months, the responses were similarly unpromising for marketers who wish for a surge of holiday spending. Twenty-five percent of respondents think they'll have more money to sped as they please, a number unchanged from last November and down a percentage point from May.
Marketers on the lookout for people willing to spend will have better luck with particular demographic categories, according to the BIGresearch report. In its analysis, "big spenders" were more likely to be men than women. And while those identified as "penny pinchers" had an average age of 46.7, the "big spenders" skewed about a decade younger, with an average age of 36.9 Spenders were also more likely than average to be single, while pinchers were more likely to be married.
— Nielsen Business Media