Holiday Shopping 2005: 'tis the Season for Giving

20th Anniversary Deloitte Annual Holiday Mood Survey Shows Consumers More Focused on Philanthropic Giving than Holiday Entertaining

NEW YORK - Nov. 1, 2005 - This holiday season, Americans will put their hard-earned money to work by giving to charitable causes, according to the 20th Anniversary Holiday Mood Survey of retail spending and trends, commissioned by Deloitte & Touche USA LLP.

Charitable donations ranked fourth in spending categories, exceeding planned spending for holiday entertaining at home, non-gift clothing and holiday furnishings, which all showed sharp declines from last year. These expected spending levels appear to reflect continued contributions for the victims of Hurricane Katrina and the earthquake in Pakistan, as well as a focus on providing for others rather than for buying for oneself and one's family.

Positive Holiday Shopping Outlook; Spending on Gifts Down Slightly

Despite predictions by many of a gloomy holiday season for retailers, 68 percent of households surveyed said they plan to spend the same or more during this holiday season compared to last year. These survey findings support Deloitte's expectation that non-auto holiday sales will increase 6-6.5 percent during the November-to-January period, less than last year's exceptional 8.6 percent increase, but still above the last decade's average growth rate.

While overall spending is expected to increase, spending on gifts is expected to be down slightly from last year, reflecting the focus on other spending categories. The one exception is consumers aged 55 years and older: this group plans to spend six percent more on gifts than they did last year. In addition, their spending is expected to be 22 percent higher than the average consumer ($735 vs. $604), reflecting, in part, the affluence of the Baby Boom generation.

A Return to Traditional Values

In addition to the focus on charity, survey respondents said they miss the "good old days." When asked what they would bring back from the past 20 holiday seasons, the resounding response involved customer service, including knowledgeable, plentiful staff; free gift wrapping; full service gas stations; local, small town stores; and human interaction in stores and on the phone.

"Consumers have told us loud and clear what they expect this holiday season," said Pat Conroy, Vice Chairman and National Managing Principal for Deloitte's Consumer Business industry practice. "They're looking for the basics: good deals, in-stock merchandise, easy return policies, extra sales help and registers and extended shopping hours. As a result, to convert shoppers into buyers, retailers will need to carefully match inventory and prices to demand and maximize customer service through managing the availability and skills of the workforce. They should also carefully craft their in-store promotional plans and offer creative purchasing options such as gift cards, value-added services and product bundling. In addition, retailers should consider promotions targeted at 55+ consumers, given their higher spend level."

The appeal of the Internet appears to have leveled off. Roughly the same percentage of consumers as two years ago will spend some of their holiday budget there (69 percent), and the Internet share of their total holiday spend has also stayed the same, at 21 percent. This year, one-third of consumers mentioned that higher gas prices contributed to their reasons for shopping on the Internet.

Time Pressures, Energy Prices Mean Fewer Shopping Trips

Higher gas prices, time-pressures and the long-term growth in Internet shopping are also expected to result in fewer shopping trips and few stores visited this holiday season. This continues a trend that has evolved over two decades - 80 percent of respondents said they shop at fewer stores today than they did 20 years ago.

Proliferation of Retail Creates More Choices but Fewer Favorites

When asked about their favored shopping venues from 20 years ago, consumers said they had two strong favorites: 67 percent did most of their shopping at either a traditional department store or a discounter in 1985. Today, consumers have no clear favorite. The top two choices, discount department store and Internet, were preferred by only 46 percent of respondents combined. Traditional department store was third, with 13 percent favoring it. Other top shopping destinations this year were several "big box" destinations such as home electronics or home improvement stores. The concept was still in its infancy 20 years ago.

Gift Cards Remain the Top Gift Purchase

Gift cards remain the No. 1 gift purchase this year, with 67 percent of respondents indicating that they will purchase an average of 4.9 cards, making them even more popular than last year, when 64 percent purchased an average of 4.7 cards. The growing use of gift cards places added importance on post- holiday retail sales as shoppers redeem them. Half of respondents said they had unredeemed cards from last year, and some reported holding cards that were five or more years old.

"Look for retailers to offer innovative promotional campaigns for gift cards this year, because these cards have become such a favorite with shoppers," said Conroy. "Online redemptions, co- branding and personalization of cards are some of the features that successful retailers are initiating this year," he added.

iPods, Cinderella and Life Jackets Among "Must Have" Gifts

Santa will be working with a long list of must-have gifts this season. XBOX, iPods, Flat screen TVs, satellite radio and musical instruments will be popular holiday gifts, according to the survey, along with recent favorites such as vacations, spa services and gourmet foods. Popular toys included Roboraptor; dolls such as American Girl, Barbie, Bratz and Dora the Explorer; Cinderella-themed merchandise; and Thomas the Tank Engine. In keeping with the theme of giving, some respondents said that their "must have" gifts would be charitable donations, and many said they don't feel there is such a thing as a "must have" gift - that people should appreciate what they have. Other "must have" presents that survey respondents will be buying this year include swim fins, White Sox tickets, Texas Hold 'em poker sets and life jackets.

Not only have their store preferences changed over the last 20 years, but consumers said they also are buying different types of gifts. A strong 58 percent say they are giving more gift certificates and 30 percent are giving more cash. Gifts of services are also becoming more popular, with 17 percent saying they now give more of these types of presents. Clothing, however, has become less popular; 35 percent say they are giving less than they did 20 years ago.

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About This Survey

The Deloitte Consumer Holiday Survey, which is designed to measure consumer expectations about the year-end holidays, has been commissioned by Deloitte & Touche USA LLP in the fall of each of the past 20 years. This year's survey polled 17,447 consumers. It was conducted on the Internet by an independent research company from October 10-18. The poll has a margin of error of +/- 3 percent.

Editor's note: PowerPoint slides summarizing the survey data in graphic format are available upon request.

About Deloitte

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