Chicago Consumers to Increase Holiday Spending 9 Percent, According to New Deloitte Survey.

Business Editors

CHICAGO--(BUSINESS WIRE)--Nov. 17, 2003

Improved consumer mood means brighter year for retailers who offer the

right shopping experience

Buoyed by an improving economy, people in the Chicago area will spend 9 percent more this holiday season than last, according to Deloitte's 18th annual consumer survey of holiday retail spending. On average, Chicagoans expect to spend $2,173 compared to $1,997 in 2002, an increase of 8.8 percent. This is significantly higher than the national average of $1,803, which increased 8.5 percent over last year.

According to the survey, 12 percent of Chicago consumers say they will spend more this holiday season compared to 9 percent in 2002. Only 33 percent say they will spend less, down 5 percent from a year ago. Spending in the gift category will fall, however, with consumers expected to spend $570 on gifts for others, a seven percent drop from 2002.

Locally, 82 percent of Chicagoans feel the overall outlook for the U.S. economy will improve or remain the same in 2004, up from 78 percent last year, which is evidenced by the increase in holiday spending. "Despite the issues in Iraq and lingering concerns about job security, Chicagoans are starting to feel better about their financial future, and this improvement in consumer mood is good news for retailers," said Gary Levin, a partner in Deloitte's Midwest Consumer Business Practice and co-author of the Bank One/Deloitte Retail Benchmarking Study. "In fact, for the first time since 2001, a larger percentage of people say they are willing to spend more this year than they did in the prior year."

The Internet continues to grow in popularity, and it is now tied with discount department stores as Chicagoans' favorite place to shop for the holidays. Sixty-one percent of Chicago consumers report that they plan to shop on line this season, up from 50 percent last year and compared to 56 percent nationally. Further, Chicago respondents say they will likely spend approximately 23 percent of their total holiday budget on the Internet this year, and 30 percent say they will purchase a holiday gift while at work. According to Deloitte, more than 85 percent of Chicago consumers have purchased a product over the Internet in the past 12 months.

"Each year, the Internet gains in popularity with consumers, and this year is no different," said Stacy Janiak, a Deloitte partner and leader in the Chicago Consumer Business Practice. "The Internet retailers who have survived the past several holiday seasons have really ironed out the kinks in regards to customer service, inventory supply and return policies, and they're offering consumers bonuses like free shipping. All of these elements combined make online holiday shopping an appealing prospect."

Despite the continued negative press regarding monthly department store volume declines, traditional department stores are seeing the biggest year-over-year gain, with 52 percent of Chicago consumers heading to department stores to shop for the holidays compared to 36 percent a year ago.

"When choosing where to spend their hard-earned dollars, Chicagoans are concerned with convenience, selection, and getting the best value for their money--not necessarily the lowest price," said Janiak. "Discount stores, traditional department stores and the Internet offer all three. As a result, they'll be the big winners this holiday season."

According to the survey, almost half of Chicago consumers will spend up to 25 percent of their holiday gift budget after Christmas. Contributing to this trend is the growing popularity of gift certificates, which came in as the third most popular gift category this year. Apparel remains the top gift choice, with CDs and DVDs a close second.

"The popularity of gift certificates is all about convenience," said Levin. "They're easy to shop for, can be bought anywhere and never come in the wrong size or color. It's a great gift choice for individuals who don't have a lot of time to shop or are shopping for numerous individuals."

Entertaining, sprucing up the home and even splurging on items for themselves are areas where Chicagoans will be spending more of their holiday dollars. In fact, Chicago respondents say that they expect to spend 47 percent more on home/holiday decor than last year, 20 percent more on socializing away from home, 17 percent more on home improvements, and 14 percent on clothing for themselves.

"Despite the fact that consumers will be socializing outside their houses this year, they are still very focused on the home, which shows in a dramatic increase in spending on decor and home improvements," said Janiak. "In addition to shopping for friends and family, consumers will be treating themselves a bit more this year".

About This Survey

The Deloitte Consumer Survey, which is designed to measure consumer expectations about the year-end holidays, is conducted by Deloitte in the fall of every year. This year's survey polled 17,035 consumers nationally, comprising a representative sample of the population. It was conducted on the Internet by an independent research company from September 18 through September 25, 2003. The poll has a margin of error of plus or minus three percentage points.

Editor's note: PowerPoint slides summarizing the survey data in graphic format are available upon request.

About Deloitte

Deloitte, one of the nation's leading professional services firms, provides audit, tax, financial advisory services and consulting through nearly 30,000 people in more than 80 U.S. cities. The firm is dedicated to helping its clients and its people excel. Known as an employer of choice for innovative human resources programs, Deloitte has been recognized as one of the "100 Best Companies to Work For in America" by Fortune magazine for six consecutive years. "Deloitte" refers to Deloitte & Touche LLP and affiliated entities. Deloitte is the US member firm of Deloitte Touche Tohmatsu. Deloitte Touche Tohmatsu is a Swiss Verein (association), and, as such, neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the name "Deloitte", "Deloitte & Touche", "Deloitte Touche Tohmatsu" or other related names. The services described herein are provided by the US member firm and not by the Deloitte Touche Tohmatsu Verein. For more information, please visit Deloitte's web site at www.deloitte.com/us.