American Express Consumer Survey Suggests Modest Increase in Holiday Spending This Year Despite the Soft Economy; "Practical-Minded" Consumers Are Searching for Bargains.

Business Editors & Retail/Consumer Interest/Internet Reporters

NEW YORK--(BUSINESS WIRE)--Nov. 12, 2002

Consumers say that their average household holiday budget will rise 5% this year, according the 2002 American Express Retail Index on holiday shopping, a national consumer poll.

This year's holiday budget is expected to be $1,656, a modest increase from the $1,564 projected in 2001. The 2002 number is still below the 2000 projected high of $1,684. This year, consumers appear cautious and describe much of their purchasing as being driven by practical considerations, such as sales and bargains.

The 2002 American Express Retail Index shows that consumers plan to spend:

-- $1,073 on gifts, up $29 from last year

-- $ 238 for holiday entertaining, up $22 from last year

Toward a "Practical" Holiday

While consumers indicate that they will spend more this holiday season than last, the American Express Retail Index shows that more shoppers this year are setting budgets for their purchases--65%, up from 60% last year. And new evidence suggests shoppers are waiting and watching for sales and special promotions. Significant numbers of consumers (86%) say sales will drive their shopping decisions. Internet shoppers, in particular, are looking for bargains. Of those consumers who say they will make purchases online, 95% indicate that they will be looking for bargains.

Another indication of this trend toward thrifty and prudent shopping is the rising number of early bird shoppers--those who began holiday shopping right after last year's season had ended. This group has nearly doubled this year to 11%, up from 6% in 2001. January and February are typically times when consumers can pick up bargains.

Half of all consumers (48%) say the word "practical" best describes their gift-giving style this holiday season--significantly more than those who say their gift-giving style will be "meaningful" (24%), "fun and whimsical" (15%), "sentimental" (8%), or "lavish" (1%).

"Consumers appear willing to spend money this holiday season, but with an eye towards deals and bargains," said Paul Dottle, senior vice president, retail industries, American Express. "Retailers that can deliver the most value to these shoppers will be the big winners this year."

Though consumers will be searching for bargains this holiday seasons, most (61%) say the economy will not influence their gift-buying decisions. Less than a third (30%) say the economy will have a negative effect and, as a result, they will budget less this year than last.

"It's no surprise to see that low prices are important to consumers," said Arthur Emmanuel, senior vice president, merchandise for Wal-Mart Stores, Inc. "Our customers, both in the stores and online, are always looking for every day low prices whether they are shopping for diamonds or shoes."

Gift Lists and Shopping Destinations

According to the American Express Retail Index, clothing and accessories top most gift givers' lists, cited by 89% of shoppers, the same percentage as last year. Other popular gift items include gift certificates, cash or gift cheques (72%), music, tapes, CDs or DVDs (70%), toys and games (66%), perfume and cologne (53%), books or magazines (51%), tools (39%), home furnishings (34%), computers and accessories (31%), experiential gifts such as a night out or spa visit (27%), health or sports equipment (26%), gourmet food (22%), patriotic gifts (19%), and career accessories (15%).

For the most part, what consumers want to receive for the holidays and what they plan to give are comparable. The Index identifies the top three gifts Americans want to receive this year are clothing (76%), gift certificates, cash or gift cheques (72%), and music, tapes, CDs or DVDs (54%). While travel-related gifts -- such as a vacation, airfare or other trip component -- ranks sixth on Americans' wish lists (38%), only 6% of Americans say they plan to give this gift.

Category winners in this year's Index include books, rising to 51%, up from 44%, and experiential gifts, chosen by 27%, up from 20%. Toys and games dropped to 66% from 72%.

Index findings about the most popular shopping destinations are similar to last year's results. Nearly nine in 10 shoppers (86%) plan to visit a mall or shopping center, the same percentage as in 2001. In addition, 64% of consumers plan to visit, stand-alone stores, 35% will utilize catalogs and 32% will visit factory outlet villages.

Mass merchandisers, such as Wal-Mart and Target, were cited as the most popular retailers by 79% of consumers, nearly identical to the 81% who chose them in 2001. Other survey results mirrored last year's finding. Seventy-three percent of shoppers will visit department stores (vs. 76% last year), 55% will visit toy stores (vs. 61%), 54% will visit bookstores (vs. 51%), and 53% will shop in music and video stores (vs. 54%). Other popular retailers include discount department stores (48%), specialty clothing stores (45%), sporting goods stores (44%), electronics stores (43%), and warehouse clubs (38%).

Forty-six percent of shoppers will use the Internet this holiday season, up from 42% in 2001. Twenty-seven percent will browse for gift ideas, 26% will compare prices, 18% will purchase gifts, and 18% will send cards and/or photos electronically. These numbers are comparable to last year.

Cash Still Rules, But More Will Charge Purchases

While cash is still the most popular form of payment for purchasing gifts, the Index reveals that fewer shoppers expect to pay in cash this year than last--80%, down from 90% in 2001. Checks are also less popular--39% cited this as their preferred payment method, down sharply from 59% in 2001. More consumers are using credit or charge cards this year; 63% plan to pay for at least some, if not all of their purchases with cards. Of that, 11% will use them to pay for all of their purchases, up from 9% last year, and 26% will use them to pay for some of their purchases, up from 21%.

The American Express Retail Index on holiday shopping was conducted by telephone between October 11 and October 18 as part of an omnibus study and surveyed 800 heads of households, age 18 and older. The 2002 American Express Retail Index looked at spending, buying attitudes, shopping trends and preferences among the general consuming public. The margin of error is +/- 3.5%.

American Express Company is a diversified worldwide travel and financial services company founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, investment products, insurance and international and online banking. For more information on American Express, visit out Web site at www.americanexpress.com.

Additional information on the American Express Retail Index on holiday shopping is available on the Web at: http://newsroom.mbooth.com/amex/