“This holiday season will see the balance of power continue to tip in favor of the consumer,” said 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. Stores should focus on providing an experience and services that create a sense of extra value in the mind of the shopper. The research data, and our conversations with clients, leads us to expect a boost from high income shoppers who are planning to treat themselves and their families.”
The Accenture Holiday Shopping Survey found that, while discount stores still remain the top holiday shopping destination, their dominant position is beginning to fade. Seventy-three percent of respondents say that they will shop at a discount retailer this year, compared to 81% last year and 85% in 2009. Despite this, discounts will still provide the biggest incentive for consumers during the 2011 holiday shopping season as 93% say that discounts are important this year.
The importance of “Black Friday” also continued to slide downwards with the results suggesting that this year’s turnout at stores could be the lowest in three years. Forty-four percent of consumers say that they are likely to shop on Black Friday, compared to 47% in 2010, and 52% in 2009.
Spending Outlook: Precision Shoppers
One quarter of shoppers (24%) plan to have a "thrifty" holiday season and one in five (18%) admit that they will be "focused on necessities," just 6% admit to planning "extravagant" or "unrestrained" holiday spending. Although, the survey findings on total holiday spend suggest an increase in the number of consumers spending more than $750 in total (19% vs. 14% in 2010), and a larger proportion of respondents spending more this season will be raising their level of spending by $500 or more compared to last year (16% vs. 10% in 2010).
Of the shoppers who say they will spend less this holiday, 43% claim it is because they have less discretionary income to spend this year, 30% have less savings, and 37% have seen a rise in living expenses.
Of those consumers who do expect to spend more this year, they appear to be split between a desire and a necessity to spend more. Forty-one percent of this group will increase spending because they have more discretionary income, and one-quarter (26%) want to treat themselves and their families after a tough year, while 41% expect to spend more this year because prices have increased.
Further demonstrating how rising costs and economic worries are impacting consumers’ outlook this holiday, respondents highlighted rising food bills (46%), gas prices (41%), concerns about the economy (39%), and home energy bills (38%) as the biggest factors that would negatively affect their holiday spending. Seventeen percent cited a fear of losing their job or a recent job loss.
As in 2010, only half (52%) of shoppers will set a budget for holiday gifts this year, and the survey did not reveal any significant increase in consumers using layaway plans (16% vs. 15% in 2010).
Retail Winners/Losers: Discount Retailers Dominate but Start to Slide
Although discount retailers will be the winners again this year, their share of responses saw a significant decline to 73% this year, compared to 81% in 2010, and 85% in 2009. The specialty retailer category, such as toy shops or apparel retailers, also saw a drop in responses from 36% in 2010 to 29% this year (39% in 2009), as did electronic goods retailers (29% vs. 33% in 2010, and 39% in 2009).
Department stores (46% vs. 44% in 2010) and online-only retailers (41% vs. 43% in 2010) maintained performances compared to last year.
“The drop in respondents shopping at discount retailers is surprising; however, it does illustrate how other retailers have stepped up to the challenge over the last couple of holiday seasons,” commented Hoffman. “In particular, the high performing department stores have retained a keen focus on promotions that are carefully targeted to hit their customers’ value buttons.”
In the Stores but Online: Smartphones for Bargain Hunters
The Accenture survey did highlight the significant challenge for retailers of consumers using their mobile phones, smartphones or tablet computers to compare prices online while in a store. Of those using a mobile or smartphone for their shopping this year, 54% will use the device to compare prices while in a store, and one third (35%) of tablet computer users do the same.
Additionally, 43% of those holiday shopping with their mobile or smartphone believe that they will help them to bag better discounts (36% for tablet shoppers), and one third (32%) will use their device to receive alerts when a product is in stock.
“Retailers must not ignore the challenge presented by the mobile shopper checking prices using their device in-store to check prices,” said Hoffman. “Their response should be driven by the use of customer segmentation to provide them with a detailed picture of what their customer is looking for. This information can be used to develop applications that attract shoppers to differentiated and value-added offerings. 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.”
The research showed no significant change in the number of consumers shopping online (66% vs. 69% in 2010. Interestingly, the number of shoppers expecting to buy more than half of their holiday gifts online rose significantly to 59% from 41% in 2010.
Free shipping (74%) and finding better discounts (60%) are still the biggest incentives to spending online, while close to half of consumers (47%) simply wanted to avoid the crowds.
Discounts: Crucial but Consumer Expectations Are Being Managed
Discounts, sales and prices are still top of mind this holiday, 40% of consumers say an item being on sale is the single most important factor in their decision to purchase. Additionally, Accenture’s holiday surveys from theast three years demonstrate a steady increase in shoppers searching for and buying all, or mostly, discounted items; 43% this year, compared to 40% in 2010, and 36% in 2009.
However, retailers will be pleased to hear that, while shoppers will be looking for a sale sign, they will not be expecting the "doorbuster"-sized deals seen in 2008; 60% will seek a discount between 20-49% (62% in 2010), and fewer (21% vs. 25% in 2010) will look for a discount of more than 50%.
Holiday Shopping Lists: Gift Cards and Clothing Still Rule
Apparel (54%), toys (36%) and gift cards (57%) will be at the top of holiday shopping lists this year. The survey also indicated an upwards shift in the value of gift cards purchased this year; 12% indicated that they would spend more than $75 on each gift card (6% in 2010).
Gadgets, such as smartphones, tablet computers or MP3 players, will also be strong with 36% of respondents looking to buy one or more of these items (35% in 2010).
Bargain Hunting Shoppers Will Hit the Stores Later in the Season
A larger proportion of shoppers will be leaving their holiday shopping until after Black Friday compared to last year (52% vs. 41% in 2010), and one third (33%) will leave the bulk of their purchases until December. The expectation of better discounts being available is the lure for 57% of consumers shopping late in the season, while 35% say they are leaving themselves more time to save.
The best time to secure bargains are seen as the Black Friday and Cyber Monday shopping events (37%) and the week leading up to Christmas (29%).
“Consumers still connect Black Friday and Cyber Monday with bargains, and this should provide some hope for the future of the Black Friday shopping tradition,” said Hoffman. “However, retailers will also need to be thoughtful about their use of discounts and promotions, and the impact on their bottom line because discounts remain a top priority for the vast majority of consumers, regardless of what stage in the season that they plan to shop.”