21st Deloitte Annual Holiday Survey Shows Seattle Consumers Plan to Shop Online; Gift Cards Continue to be Strong.

SEATTLE -- With concerns about high energy prices and a softening housing market subsiding, American consumers are bullish about the economy, according to the 21st Anniversary Holiday Survey of retail spending and trends, commissioned by Deloitte & Touche USA LLP.

Deloitte predicts holiday sales will increase 7 percent during the November-to-January period. While less than last year's exceptional 7.8 percent increase, the Deloitte outlook is well above the average of the past decade, and at the high end of forecasts for this year's holiday season.

While 68 percent of Seattle area consumers surveyed expect the economy to improve or stay the same next year, compared with less than half (48 percent) in 2005, only 58 percent of the respondents say they feel secure about their jobs well below the national average of 82 percent.

"Consumers have withstood challenges this year in the Seattle from energy costs, slow growth in jobs and softness in the housing market, and yet they continue to be bullish about the economy and their own financial well-being," said Lynnette Frank, a partner of Deloitte's Consumer Business practice in Seattle. "Overall spending is expected to be up for many key categories, supporting our forecast of seven percent growth in sales this holiday season."

A Conservative Approach to Debt

Refuting conventional wisdom about Americans' attitudes toward debt and credit cards, 63 percent of total holiday purchases will be paid for using cash, checks, or debit cards, according to the survey respondents. Further, 38 percent of individual consumers surveyed say they will not use credit cards at all for holiday shopping.

Gift Cards Still Rated High; Mixed Bag for Retailers

Gift cards are expected to continue to be the top gift purchase, with nearly six out of every 10 (59 percent) of Seattle consumers planning to buy at least one gift card. Holiday shoppers in the region are planning on buying an average nearly 4 cards. Despite their popularity, more people want to receive a gift card than want to give one: of those surveyed, 35 percent would rather get a gift card than merchandise; however, 22 percent say they don't like to give gift cards because they're too impersonal. This dichotomy presents a potential opportunity for retailers to market and sell gift cards to those who remain reluctant to buy them.

However, gift cards may present a mixed bag for retailers. "Our survey showed that, as a result of buying gift cards last year, 50 percent of consumers spent less time shopping during the holidays and 41 percent bought fewer spontaneous, spur-of-the-moment items," said Frank. "Successful retailers can benefit from gift-card-and-product bundling, incentives for shoppers to buy additional products while in the store, and other strategies to upsell and cross-sell with gift cards."

Seattle Shoppers Prefer Buying Online and at Discount Department Stores 

Convenience and time pressures, among other factors, continue to push shoppers to the Internet. Nearly 60 percent of the area's consumers polled plan to shop online. More than three-fourths of the Seattle respondents cited the convenience of 24/7 shopping as the main draw for shopping on the Internet this holiday season.

"Online shopping continues to convert more readily into online buying, and 'online pre-shopping' - researching items and comparing prices online before heading to a store - is becoming far more pervasive," said Frank.

Discount and traditional department stores continue to attract a substantial share of consumers: of those surveyed, 60 percent of Seattle shoppers will shop at a discount department store this season (versus 74 percent nationally) and 49 percent will shop at a traditional department store (versus 48 percent nationally). While traditional department stores continue to be favored by upper income households and older age groups, interest from younger groups is also increasing, with nearly half (47 percent) of Gen Y shoppers (18-29 year olds) planning to shop in them (versus 41 percent in 2005).

About the Survey:

The survey was commissioned by Deloitte & Touche USA LLP and conducted online by an independent research company between September 25 and October 11, 2006. The survey polled a sample of 13,399 adult consumers. The margin of error for the entire sample is plus or minus two percentage points.

About Deloitte

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