Consumer forecasts predict holiday spending online

Two holiday shopping forecasts differ on the details, but arrive at the same general conclusion: much of consumers’ holiday spending will be online this year. 41% of consumers surveyed by the NPD Group plan to buy gifts online this year. Research consultancy Brand Keys Inc.’s Holiday 2004 Trends Predictions places that number higher at 67%.

The NPD Group gathered data showing that those gravitating toward online shopping tended to have higher income and skew toward a younger age bracket. More than half the consumers who said they will shop online have incomes of more than $75,000 per year, while shoppers aged 25 to 44 will drive online spending, its survey found.

A majority of consumers surveyed by the NPD Group, 56%, said that they will comparison shop before actually buying, with one in three surveyed saying they planned to wait for a sale before buying. In particular, consumers surveyed said price will drive their purchase more in categories such as electronics than it does for apparel or computer software.

“Computer software and clothing do not need to be discounted to sell, in the way that products like cameras and stereos do,” says Marshal Cohen, chief industry analyst for the NPD Group. “However, consumers have come to expect that much of what they buy for the holidays will be on sale.”

69% of those polled by the NPD Group plan to spend less than last year on holiday gifts, while 12% said they will spend more. On average, consumers planned to spend $655 over the holidays. And many of them will be spending that later in the season, a potential boon for Internet retailers able to deliver late but in time for the holidays. While 4% of those surveyed said they will wait to begin their holiday shopping at the last minute, 32% expect to do at least some of their shopping at the last minute, according to the NPD Group.

In contrast, the largest share of the consumers surveyed by Brand Keys – 67% -- plan to spend the same as last year, versus the 8% who will spend more and the 25% who plan to spend less. Yet more of that spending will go online, with holiday shoppers spending $26.5 billion online this year, Brand Keys forecasts, about 30% more than last year.

According to the Brand Keys survey, the web’s popularity as a holiday shopping destination gained more than any other shopping venue over last year. The 60% of consumers polled who plan to do holiday shopping online this year is 10% more than last year. While 75% of the 16,000 consumers surveyed plan to be shopping in discount department stores this holiday, that represents only a 5% gain over last year. The 55% indicating they’ll shop in traditional department stores is 3% more than last year, while the 45% planning to catalog shop is up 4% over last year and the 38% who plan to shop specialty stores is down 2%.

The Brand Keys Customer Loyalty Index Survey also provides a perspective on which search engines and which retailers will be the biggest beneficiaries of increased online activity this holiday. In order, the retailers are Amazon.com. BarnesandNoble.com, CDNow and Buy.com. Expected to get the most searches for products and deals is Google, followed by Yahoo.com, MSN.com, AOL.com and Excite.com.

The product categories expected to get the most consumer spending overall aren’t significantly different from last year, according to Brand Keys, with a few exceptions. The category of consumer electronics, computers and phones got a slight bump up, with 48% of those surveyed saying they will purchase in this category, 3% more than last year. At 45%, the number who plan to purchase gift cards is up 4% over last year. 10% say they plan to travel or purchase trips as holiday gifts, the first time travel as a gift has appeared in the survey, according to Brand Keys. Apparel remains the most popular holiday gift purchase among consumers, with 51% of those surveyed saying they plan to buy clothing and accessories.