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Holiday Spending Forecast: Spectacularly Unspectacular



Published November 4, 2010
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Holiday Spending Forecast: ‘Spectacularly Unspectacular’

New data from Accenture shows that the overwhelming majority
of shoppers will maintain a tight grip on their wallets as they hit the stores this holiday season. According to the company’s new consumer holiday shopping survey, 83% expect to spend the same or less on gifts compared to 2009.

“The 2010 holiday shopping season will be spectacularly unspectacular for many consumers, but that will suit retailers who remember well the turbulence of Holiday ’08,” said Janet Hoffman, managing director of Accenture’s retail practice. “Our data suggests that consumer spending will be flat compared to last year, aided by a continuation of conservative discounting by stores and the limited discretionary income of many shoppers. In 2009, the trust that retailers showed in their forecasting and ordering systems to control their inventory was crucial to their success. They will need to exercise that same trust and discipline again if they are to be a winner this season.”

The annual Accenture Holiday Shopping Survey also revealed that discounts would be a key motivator for most consumers this year, despite moderate reductions by retailers in 2009. More than three quarters (87%) of respondents will not be moved to buy without a discount of at least 20%, and one quarter of respondents said they will demand an aggressive discount of 50% or more in order to make a purchase.

The study also highlighted increasing apathy toward the “Black Friday” shopping tradition. More than half of consumers (53%) said that they were unlikely to shop on Black Friday, or they have not yet decided (48% in 2009).

“The growing ambivalence toward the traditional Black Friday shopping trip is being driven by a number of factors,” said Hoffman. “The increase in the number of homes with broadband internet access means that many shoppers will prefer to stay at home and bag the offers online rather than brave the crowds. Combined with this, over recent years we’ve seen retailers maintain their discounts throughout the season rather than focusing activity around Black Friday.”

Another ghost of Christmas Past is the concept of saving up for the season—remember the Christmas Club savings plan? Only 13% of consumers said that they had been saving money throughout the year for their holiday shopping and one third (32%) said that their dollar will not stretch as far as in 2009. Additionally, 25% said that paying for the holiday season makes it a stressful time of year, which could potentially impact their spending.

On the bright side, the Accenture study found that the popularity of online shopping continues to grow. According to the survey, 69% of respondents said they would be buying holiday gifts online this year, up from 64% in 2009. According to Accenture, 41% of respondents said they are buying at least half of their holiday gifts online and 38% are planning to spend between $100 and $250 online.

Accenture conducted the online survey using a representative sample of 526 U.S. consumers in September 2010.

Beauty Ads Should Boost Confidence, Offer Free Samples
The most compelling beauty advertisements appeal to consumers’ confidence rather than their insecurities—and offer free samples, according to About.com’s 2010 Beauty Study. The study also revealed that beauty products are considered a necessity, with more than two-thirds of respondents willing to purchase products even while watching their budgets.

The study, conducted online, examined why consumers use beauty products; what influences purchasing decisions; what kind of beauty advertisements are most appealing; and what brands can do to attract new customers. It also looked at what emotions beauty products evoke in consumers.

“We see a significant number of intent-driven consumers willing to pay higher prices for quality, brand products that satisfy specific beauty needs,” said Evan Minskoff, VP-marketing, the About Group. “This presents brands with the opportunity to truly engage this audience by emphasizing the relevance of their products to consumers’ core beauty goals.”

The study revealed that beauty products are non-negotiable, regardless of budget, because consumers view them as an important part of life and necessary to help maintain their look and skin/hair health. Eighty percent of respondents plan to spend more or the same this year on skin, hair, male grooming, teeth whitening and cosmetic products, according to About.com, which is part of The New York Times Company.

The study also concluded that consumers prefer ads that appeal to their confidence, rather than to perceived insecurities. They also prefer ads that present brand and product benefits in an informative, intelligent way, and are receptive to ads that stress quality over price. The most compelling ads offer free samples or trials (cosmetics, 71%; skin care, 64%), printable coupons (cosmetics, 58%; skin care, 56%) and product information (cosmetics, 49%; skin care, 44%).

More than 50% of consumers prefer well-established brands because they are more reliable and are perceived to have higher value. Consumers prefer well-established brands over generic for cosmetics (73%), skin care products (72%) and hair care products (67%).
More info: www.about.com

Spa Visits Fall 10% in 2009
Spas, like every other industry, were impacted by the worst economic downturn since the 1930s, according to the International Spa Association’s newest study of the U.S. spa industry. However, even with the decline, the “big five”indicators remain at their second-highest level since ISPA’s first study in 2000, the association said.

Day spas continue to comprise an overwhelming majority of establishments (79%); resort/hotel spas comprise the second largest segment (8.8%) with medical spas a close third (8.7%).

Spas received an estimated 143 million client visits in 2009, down 10.2% from 2008. Total revenue, according to ISPA, fell 4.3% to $12.3 billion in 2009. The four main spa treatment and service categories—massage and bodywork, skin care, hair and nail—accounted for 78% of total spa revenue. Retail accounted for 12% of spa revenue, according to the association.

As a way of managing the effects of the recession, most spas have reengineered their menus. According to ISPA, 75% percent have introduced shorter treatments (30 minutes or less) to provide a less expensive option for clients with busy schedules.

The full study is free for association members or can be purchased online, according to ISPA.
More info: www.experienceispa.com

Facebook Study Examines Consumer ‘Herd’ Instinct
Teens aren’t the only ones who seem to be guided by the “everyone has one, so should I” mentality. A new study shows that consumers are more likely to take up a product if they see that it is already very popular. The research, led by Oxford University, has shown consumers have a herding instinct to follow the crowd once a clear winner is established. However, this instinct appears to switch off almost entirely if the product fails to achieve a certain popularity threshold.

The study, published in the PNAS Journal, is based on an analysis of how millions of Facebook users adopted software apps to personalize their Facebook pages. The researchers analyzed anonymized data that tracked 100 million installations of apps adopted by Facebook users over two months in 2007. The data allowed researchers to observe on an hourly basis the rate at which 50 million Facebook users installed 2,700 apps.

They discovered that once an app had reached a rate of about 55 installations a day, its popularity then soared to reach stellar proportions. A typical app was installed by 1,000 users, but the most popular app—Top Friends—was adopted by almost a fifth (12 million users) of the entire Facebook population. Back in 2007, Facebook friends were notified if one of their online friends adopted a new app.The study suggests that social influence had a key role in whether apps became flops or hits.

“Our analysis reveals a very interesting new finding,” said senior researcher Felix Reed-Tsochas of Oxford University’s Institute for Science, Innovation and Society at Saïd Business School. “Users only appear to be influenced by the choices of other users above a certain level of popularity, and at that point popularity drives future popularity. Below this threshold, the effects of social influence are imperceptible. Because popularity seems to depend mainly on the choices of other users in the community, rather than intrinsic characteristics of the applications themselves, it does not appear possible to predict which applications will succeed and which will fail ahead of time.”

Reed-Tsochas continued, “At this stage, we simply don’t know whether this marks an important difference between offline and online behavior, or whether more detailed and comprehensive data from offline contexts will identify similar collective behavior in settings that do not involve online environments.”


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