Small Rise for Holiday Retail Sales as Value-for-Dollars Rules

NEW YORK NY November 26 – Retailers may have some reason to rejoice this holiday season, according to Brand Keys, Inc. www.brandkeys.com, a New York City-based brand and customer loyalty research consultancy. Despite a still-questionable economic recovery, Brand Keys projects the average consumer holiday spend will be almost 3% higher than it has been for the past four years.

Methodology

Brand Keys interviewed 16,000 consumers in the nine US census regions in October in regard to their anticipated holiday spending.

1. Holiday Spending

Consumers indicated that they are again going to be extremely conservative, with 68% saying that the economy will impact their final holiday spending.

An on-going trend Brand Keys observed is that no matter how much consumers spend, “the time-honored ‘price-value’ equation that retailers have relied upon for decades has been transformed by the US economy, in-market experience and consumer expectations into a ‘value-for-dollar’ doctrine,” noted Brand Keys president Robert Passikoff. “The retail brand, and what it stands for, has become a surrogate for added value if the retailers understand real consumer expectations and actually know what to do. Most don’t.”

Two-thirds Seek Sales

As in past years, retailers are expected to focus on inventory control and supply chain efficiencies to limit exposure and increase profits. “But discounting has become price-of-entry in the marketplace. Sixty-four percent (64%) of shoppers indicated that they’ve already begun looking for sales. Sixty percent (60%) indicated that they were using on-line shopping/price comparison applications to find the best deals, and 50% indicated that they were going to rely on coupons to keep costs down,” noted Passikoff.

As retailers have taught, and consumers have learned, there are always lower prices around this time of year. Smart retailers are planning promotions very carefully. And if they want a larger piece of the holiday pie they are going to have to leverage their retail brands and the shopping experience. Here’s how consumers responded when asked if they were gong to spend more, less, or the same this holiday season as they did last year:

Need Drives Spending

“It’s not much of a change over last year, but it’s moving holiday spending in the right direction, and two factors are amplifying the consumers’ desire to spend,” said Passikoff. “The first is basic need. There’s a necessity to replace old products and clothing. The second, the holidays provide the traditional ‘reason to buy,’ a relief valve for pent-up desire for some good old discretionary spending, which is showing up in the products and services they have on their shopping lists.”

2. How Much Will They Spend?

Customer spending intentions were only directionally higher from those of last year. On average consumers indicated that they were intending to spend about $800.00, or about 2.5% more than last year. “But consumers are still going to watch for shopping opportunities to stretch their dollars. Retailers may be offering discounts, but in this environment advertising , promotions and discounts have already begun, and it’s not even Thanksgiving,” observed Passikoff.

3. Where Will They Spend Their Money?

Consumers indicated that they woulduse the full range of retail formats and channels available.

“More shoppers say they’ll go online to shop this holiday season,” said Passikoff, “but that’s a continuing trend whether the economy’s good or bad.” Given that consumers are being careful about spending, they’ll also be looking for retailers offering higher levels of customer service. “Retailers are already offering free shipping as a token of added-value. But shoppers expect a lot more. Free shipping and returns are the classic retail example of what was once a ‘delight’ is now an ‘expectation’.”

Ten percent (10%) of respondents indicated that customer service would be a real retail differentiator, which is “a continuing trend we’ve seen in our Customer Loyalty Engagement Index,” noted Passikoff. “They want more service and an enhanced shopping experience. Retailers who can deliver will see more sales, higher loyalty, and increased profits.”

Location and Value are still the key engagement and loyalty drivers for the retail category at all levels. “But even with tighter budgets, Merchandise Range, Store Reputation, and especially ShoppingExperience,play a much larger role in engaging customers and generating sales,” said Passikoff. “Specialty stores have somewhat greater control over those elements, which is likely why growth in the number of consumers who indicated that they were going to use that channel showed the greatest growth this year.”

4. On What Will This Money Be Spent?

“Shopper responses were very similar to last years’ declared purchases. There’s been a big increase in clothing and gift cards,” noted Passikoff. “Jewelry and personal care products and services have re-appeared on this year’s list, a pretty good indicator that discretionary spending, or at least the craving to discretionary spend, is on the rebound.”  All other traditional purchase categories are either flat or only slightly down.

Nearly two-thirds of the consumers surveyed (65%) indicated that they have begun their holiday shopping earlier this year, with most indicating they’ve been looking for gifts (and sales) well before the traditional post-Thanksgiving ‘Black Friday’ or ‘Cyber Monday.’ “But you only have to walk through the stores,” noted Passikoff, “to see that the Holiday Season is well underway.”

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Brand Keys (www.BrandKeys.com)is the only research consultancy that specializes in customer loyalty, providing brand-equity measures that accurately predict future consumer behavior. These measures enable companies to anticipate every shift in a rapidly changing marketplace and to better engage customers.