Matters Not if You're Naughty or Nice, Gifts Will Still Be Few

Consumers Will Spend Same Amount or Less on Holiday Shopping This Year, Says Ad Age/Ipsos Observer Survey

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CHICAGO ( -- Don't be surprised if you get fewer holiday gifts this year -- or cheaper ones.

According to an exclusive Ad Age/Ipsos Observer survey of U.S. consumers, nearly 85% of consumers predict they will spend the same amount or less on their holiday shopping this year. What's more, nearly 30% reported that they will buy presents for fewer people.

Coupon Usage and This Holiday Season charts

Coupon Usage and This Holiday Season charts
The online survey of more than 1,000 U.S. consumers was conducted in mid-November and found that shoppers are cutting back in a variety of ways. For one, coupon use was up last year during the recession -- reversing a 17-year decline -- and is projected to further increase in 2010. More than half of those surveyed (60% of women, and 41% of men) clip coupons most of the time or always and only 27% said they pay full price with that frequency. Already, more than 25% of survey respondents reported using daily discount sites like Groupon or Living Social, part of a category that has exploded in the past year.

While this is likely helping the consumer's bottom line, it's not necessarily having the same effect for marketers. SymphonyIRI Group data show that coupons are not driving incremental sales. They are more likely to offer discounts to those already planning to buy, thereby cutting at the margins for retailers.

It's more evidence that marketers should not jump on the coupon bandwagon just because their competitors are since discounts aren't likely to drive brand switching. "It's the program of last resort," said Sean C. Seitzinger, senior VP of SymphonyIRI, consulting and innovation. He said the best coupons are highly targeted, pointing to Safeway's "Just for U" promotion in Hawaii as an example of a marketer utilizing an effective market-to-one strategy for coupons.

More subtle cutbacks are in play as well. Only 7% of respondents said they would be buying for more people. The majority said they shop for at least six people during the holidays, with 11% filling 16 or more stockings for family, friends and coworkers.

While the National Retail Federation predicts holiday sales will be up a modest 2.3% this year, that spending might not be distributed evenly. As the economy struggles to bounce back amidst still-high unemployment, some consumers are feeling the recovery faster than others.

Shoppers hunting for deals and convenience increasingly turned online during the Thanksgiving selling season. Coremetrics reported sales jumps of 19.4% on Cyber Monday, 9% on Black Friday and 28% on Thanksgiving Day when many retailers started rolling out their Black Friday deals early. These numbers far outpaced the nearly flat sales at physical store locations.

The Ad Age/Ipsos Observer survey found that more than seven in 10 consumers are now comfortable making online purchases, while only 16% are still wary. But nearly half of respondents said they do less than 25% of their shopping online. What do they buy? The majority of consumers purchase items in categories such as clothing (65%), electronics (62%), music (38%), and travel (57%). Online grocery purchases haven't hit that same critical mass yet with only 13% saying they make food purchases online.

In-store grocery shopping was another major focus of this Ad Age/Ipsos Observer survey. Of those who do the majority of their household's grocery shopping, more than three-quarters said they shop at a grocery store at least once a week.

The majority still take the time to eat together with their families on most nights, although they are evenly split on whether they cook from scratch or use pre-packaged dinners. Some 25% reported they buy food from a convenience store, 35% from Walmart and 42% eat out at restaurants at least once a week. Walmart is so far winning the superstore-supermarket war. Target was listed as an at-least-once-a-week destination for only 16% of grocery shoppers.

Consumers who responded to the survey choose their stores largely based on price, although location and a large selection of brands also factor into the decision.

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