HOLIDAY ATTITUDES: WHAT RETAILERS HAVE PLANNED, WHAT CONSUMERS WANT
NEW YORK, Nov. 26 /PRNewswire/ -- The shorter holiday shopping season this year may not have an adverse effect on retail sales. American consumers prefer well-known brand names for gift-giving. And retailers are offering lower initial prices which should please consumers who buy most of their holiday gifts on sale.
These are some of the findings of "Retail Holiday Outlook -- Two Opinion Polls of Retailer and Consumer Attitudes," which has been conducted in an exclusive arrangement this fall by the TRADE Retail & Distribution Services Group of Deloitte & Touche, the Big Six accounting/consulting firm, and DDB Needham Worldwide, the nation's seventh largest advertising agency.
While the retail TRADE group of Deloitte & Touche surveyed retail executives through its network of 34 offices nationwide for its seventh annual "Retail Business Outlook," DDB Needham surveyed consumers about their holiday shopping habits and intentions.
Survey responses represent 1,072 retailers in all retail categories and 2,945 consumers in a sample that is closely balanced to the United States Census for adult heads of households.
"The findings show that the holiday season will be keenly competitive among retailers with heavy price promotions, more advertising, and tighter inventory control," says Irwin Cohen, co-chairman of the retail TRADE group of Deloitte & Touche. "Retailers expect their actions, on balance, will produce a slightly better performance this year compared to last year's holiday season."
According to Keith Reinhard, chairman and chief executive officer of DDB Needham, "Our Life Style Study has tracked consumer attitudes and has identified emerging trends for 17 years, but this is the first time that we've linked consumer opinion with the retailer perspective. The result is a richness of data that no single survey can achieve," he says.
When Consumers Shop
According to the consumer research findings of DDB Needham, holiday shoppers can be divided into three groups:
1. Early Birds. A surprising 25 percent of all consumers do most of their holiday shopping well in advance of the holidays. The bulk of their purchases are made nearly two months before Christmas.
2. Crushed Crowd. This group represents about two out of three consumers. They do most of their shopping within a two to six week period before Christmas.
3. Last Minute Men. Eleven percent of consumers make most of their holiday purchases within one week of Dec. 25. This group is dominated by men who are more than 10 times as likely as women to wait until the last minute to do their Christmas shopping (21 percent vs. 2 percent, respectively).
Major Holiday Mark Down Plans
& When Consumers Shop For Sales
In linking the findings from the Deloitte & Touche retail TRADE group's survey about merchants' major mark down strategies in-place for the holiday season with when sales-minded consumers shop for holiday gifts, as measured in the sample by DDB Needham, retailers appear to be missing the mark.
-- The majority of retailers who said they would be taking mark downs earlier this year (66 percent) indicated these would be done before Thanksgiving.
And yet, on the consumer spectrum, 31 percent of those who buy on sale for holiday gifts do so before Thanksgiving.
In comparison, the findings also show that 21 percent of bargain gift seekers make sale purchases the week of Thanksgiving, which differs by a week or more, pending how this holiday falls each calendar year.
Meanwhile, 15 percent of all retailers surveyed cited the week of Thanksgiving as when they plan to take major mark downs.
-- Among those retailers planning to take mark downs the same time as last year, the majority (41 percent) said price reductions will happen between one to four weeks before the week of Christmas, which has been the traditional time period in the industry.
And yet, 20 percent of gift-minded bargain hunters seek their on-sale purchases during this period.
-- During the week of Christmas, 53 percent of all retailers indicated they would be taking mark downs, while only 7 percent of bargain-minded consumers said they would be shopping for sales.
Tighter Inventory Control,
Earlier Price Promotions
In holiday merchandise strategies this season, more retailers this year than last year (41 percent versus 31 percent) are buying closer to the selling season, according to the retail research findings of the retail TRADE group of Deloitte & Touche. This tactic of tighter inventory control puts more of the service and cost responsibility on the vendor.
Other findings also indicate retailers are changing their merchandise assortments to a greater degree this holiday season. More than one-third are trying to better differentiate their offerings from the competition.
Another tactic is to begin price promotions earlier in hopes of getting to customers sooner with initial low price promotions, rather than offering marked-down goods later. The tactic least mentioned by retailers is to sell more brand name merchandise.
Among retailers offering catalogs, the trend appears to be toward increasing circulation, versus the number of mailings, and changing merchandise assortments. Fewer retailers are leaning towards offering merchandise in catalogs that is not available in their retail outlets.
Brand Names and Sales
are Tops with Consumers
Findings from DDB Needham's consumer survey show that the majority of consumers (70 percent) try to stick to well-known brand names during the holidays. This behavior is a significant increase from the usual levels of brand loyalty exhibited throughout the year (61 percent).
-- The percentage of people who feel that store brands are a better buy than nationally advertised brands (48 percent) declines a bit at holiday time from other times of the year when the level is at 53 percent.
-- Increased brand loyalty may apply more to gifts that consumers buy for others than to merchandise they buy for themselves.
Being very price conscious, two out of three consumers say they will buy most of their holiday gifts on sale. Women, who spend more on gifts than men, will be much more likely than men to be buying those gifts on sale.
People readily acknowledge they are not as good at saving money during the holidays as they are at other times of the year. The usual consumer habits of carefully checking prices and of shopping a lot for specials are even more prominent at holiday time.
Bargain hunting season is not confined to the holidays. Nearly half (47 percent) of consumers surveyed, predominantly women, say they always do a lot of shopping right after Christmas to take advantage of sales.
Department Stores Popular
for Gift Shopping
The traditional department store is the most popular place for holiday shopping (44 percent), although discount stores and mass merchandisers closely follow in preference (38 percent).
Seven percent of consumers say most of their holiday gifts will be from a catalog. Early Bird shoppers, however, are much more likely to shop from catalogs than either the Crushed Crowd or Last Minute Men. Catalogs not only help Early Birds complete their shopping before others, they also appear to diminish this group's reliance on department stores.
Collectively, non-apparel specialty stores, warehouse clubs, and specialty apparel stores will be the most popular gift outlets for about one in eight shoppers.
Lower Initial Prices and More Promotions
No matter where consumers shop, retailers are trying as best they can to induce sales. Price competition is more intense compared to last fall/winter. So retailers are offering lower initial prices and are counting on higher volume.
This tactic is expected to decrease their gross margins and increase their markdowns as a percentage of sales. Twice as many retailers are planning for markdown increases than for decreases, and half of the respondents don't expect a change.
In other shifts compared to last year, advertising as a percentage of sales is up with retailers increasing expenditures. They are more likely to allocate more dollars for promotions, in general, with less spending on institutional advertisements.
With this measure comes an increase, as well, for sales promotion as a percentage of advertising, with more efforts centered on item- oriented, or one-day sales blitzes.
These shifts can be seen in advertising/promotional budget allocations by type of medium. The biggest percentage shifts are for more in-store promotions, point-of-purchase promotions, direct mail/catalog, and co-op advertising, respectively.
Newspapers Primary Source for Shopping Information
Consumers indicate that their primary sources of holiday shopping information are newspaper supplements and inserts (54 percent) and run- of-press advertisements (45 percent), followed by direct mail and catalogs (32 percent), television (21 percent), magazines (11 percent), and radio (4 percent).
However, the use of these various media can change depending on when consumers do the bulk of their shopping. As examples:
-- The longer consumers wait to do their shopping, the more prominent TV becomes as an important information source. So, Last Minute Men are more likely to look to TV for holiday shopping information, and less likely to rely on newspapers, than the Crushed Crowd or Early Birds.
-- Early Birds are more likely to take advantage of direct mail than the Crushed Crowd and Last Minute Men.
Less Use of Credit Cards Than Last Year
Besides keeping an eye out for sales, another way consumers may control their purse strings is by controlling their debt. Indications are that many shoppers anticipate using their credit cards less this season than they did last year.
Half the sample (51 percent) thinks the amount they will charge on their credit cards this year for holiday gifts will be less than last year. This reduction is not due to less spending overall; more than half the consumers plan on spending at least as much this year as last. Rather, it appears consumers will be trading off credit card purchases for cash transactions.
Two out of three consumers claim they like to pay cash for everything they buy at the holidays (a proportion similar to that during the rest of the year).
A significantly greater proportion of people at holiday time, vs. other times of the year, acknowledge that credit cards get them too deeply in debt.
Unusual Gifts, "Please" and Gift Categories
A lot of people still express interest in buying new and unusual gifts during the holidays. Also, two out of five people say that at the holidays they often buy things they want even though they may not need them.
Merchandise categories retailers expect to be "hot sellers" this holiday season are: women's apparel, men's wear, consumer electronics, and home furnishings/decorative accessories.
When consumers were asked on which gifts they plan to spend the greatest amount of money, women's apparel and children's toys and games (excluding video games) are in the top category tier for their dollars (23 percent and 20 percent, respectively).
Between 7 percent and 9 percent of consumers say the greatest proportion of their gift dollars will go to children's apparel, men's apparel, women's accessories, home furnishings, home electronics, or fine jewelry. (Retailers of fine jewelry should note that men are much more likely than women to spend a greater share of their dollars in this category.)
It should be noted that dollar allocation rank does not necessarily reflect strong or weak sales in a given category. While item popularity is a factor in dollar allocation, what people spend in a given category relative to others also reflects varying price points, item variety, and even appropriateness of the item as a holiday gift.
Environmental Products and In-Store Policies
When asked by DDB Needham about environmental products, about two out of three consumers (65 percent) claim they would be willing to pay more for products that are environmentally safe.
At the same time, the holidays seem to soften people's skepticism of companies' claims that their products are environmentally safe. During the year, 56 percent express doubts over such claims, compared to 48 percent at the holidays.
In the retail TRADE group's survey on the topic of the environment, nearly 46 percent of retailers say they use recyclable packaging and nearly an additional 8 percent plan to in 1992. Only 20 percent have altered their product mix to brand name merchandise thought to be environmentally sound, and 5 percent plan to next year.
Nearly one-third of retailers have increased, or plan to in 1992, promotion of environmentally sound merchandise. And nearly one-quarter of the sample have implemented, or plan to next year, employee incentive programs to promote environmental awareness.
The Shopping Experience
All retailers should take note of what consumers say about the holiday shopping "experience." They don't care for it. During the normal course of the year, 47 percent of consumers say that "shopping is no fun anymore." That percentage dramatically jumps to 58 percent at holiday time.
About the Methodologies
The "Retail Business Outlook," conducted throughout October by the retail TRADE group of Deloitte & Touche and its 34 participating offices nationwide, represents responses from 1,072 retail executives in major retail segments of the industry.
General merchandise, apparel, furnishings and other (GAFO) categories -- the standard industry classifications -- represented in the survey are: department store (4.4 percent); specialty department (12.4 percent); discount department (2.9 percent); mass merchant (2.9 percent); variety (2.2 percent); catalog showroom (1.2 percent); membership warehouse club (0.5 percent); apparel (21.6 percent); home furnishings (12.2 percent), which includes home entertainment/electronics, video stores and major appliance stores; other specialty retailers (13.8 percent); non-GAFO categories (26.7 percent), which includes supermarkets, drug stores/health and beauty aids, combination drug/supermarket, convenience stores, and home improvement retailers; and other non-GAFO specialty outlets.
The self-administered questionnaire of 20 questions covered the outlook for the national economy and the retail holidays, and marketing trends for the upcoming year.
The majority of participating companies' annual sales volume (all stores) range from $1 million to $20 million and the overall range is from under $1 million to over $200 million. Store locations are from under 20 to over 500.
The DDB Needham consumer research, which was also conducted throughout October, was completed by 2,945 men and women who are members of the advertising agency's Life Style Study consumer panel.
This nationally representative sample of adult heads of households completed a custom 32-item, self-administered questionnaire in their own homes. The questionnaire covered consumers' anticipated purchase patterns for the 1991 gift-giving season and their attitudes toward holiday shopping.
In order to see how consumer attitudes about shopping change during the holidays, several questions on the holiday survey also were asked of these same respondents earlier in the year on the general Life Style Study survey.
The DDB Needham Life Study has been conducted annually by the agency since 1975. During the first quarter, 4,000 men and women nationwide are surveyed by mail and are asked approximately 1,000 questions about their attitudes and opinions on a wide range of topics. The sample is closely balanced to the U.S. Census for adult heads of households.
About the Firms
The TRADE Retail & Distribution Services Group of Deloitte & Touche is the largest practice exclusively focused to serving the needs of retailers and related industries. Its network of professionals throughout North America provides accounting and auditing, tax, and management consulting services to a broad base of clients. Deloitte & Touche, the nation's third largest professional services firm, serves clients through 16,500 people in offices in more than 100 U.S. cities. The firm is a leading member of DRT International.
DDB Needham Worldwide is the seventh largest advertising agency in the United States. More than 1,000 clients are served by the agency in 91 offices around the world.
/CONTACT: Sally Robbins of Deloitte & Touche/TRADE, 212-492-2162; or Lou Tripodi of DDB Needham, 212-415-2109/ CO: Deloitte & Touche; DDB Needham Worldwide ST: New York IN: REA SU: ECO FC-GK -- NY002 -- 7139 11/26/91 08:32 EST