Even with endless gift choices available online … gift cards reign supreme.

Gift cards are bigger than ever in holiday season 2011
Gift cards are forecast to be bigger than ever in holiday season 2011.
The growth of online shopping has been well-documented, and this holiday season is no exception.

And why not? Online shopping so convenient and cost-effective.

Shopping online gives people the flexibility to shop from wherever they are, without having to spend money on transportation. They can shop at all hours of the day or night. Merchandise price comparisons between sites are easy to do. And in many cases, consumers won’t have to pay any sales taxes or shipping charges.

Tack on free gift notes and even free gift-wrapping at many sites, and you have to wonder why anyone would bother to shop for gifts any other way.

In an environment where shopping has become so easy, convenient and cost-effective – and with basically endless merchandise choices – you might figure that holiday shoppers would be finding and buying “just the right gift” for family members or friends.

And so what’s “just the right gift”? Gift cards – to the tune of $28 billion, according to the National Retail Federation’s Holiday Consumer Intentions & Actions Survey, which queried more than 8,500 consumers in early November.

It’s not just that gift cards are the easiest possible gift to buy, with basicaly zero thought going into the purchase. It turns out they’re also the most requested holiday gift on people’s wish lists. (Prior NRF surveys going back five years have found that to be the case, too.)

The 2011 holiday intentions survey found that gift cards are on track to eclipse last year’s performance:

More people plan to purchase gift cards this season (~80% versus ~77% in 2010)

 The average gift card amount will be higher (~$43 vs. ~$41)

The average total spend on all gift cards is predicted to be ~$155 per purchaser. The survey also found that men tend to spend more on gift cards than women.

Speaking for myself, I’m not at all surprised by that last finding. I think I fit the profile pretty well: After “one too many” gift returns made by my wife and daughters, I resorted to gift cards a few years ago and have never looked back.

Holiday Consumer Spending Forecast Tracks the Economy: Just Muddling Along

The holiday shopping forecast for 2011 is pretty blah.If anyone was hoping for good news at the end of the year, it’s not coming in the form of increased holiday spending by consumers.

The National Retail Federation’s annual Holiday Consumer Intentions & Actions Survey concludes that holiday shoppers plan to spend an average of just over $700 on holiday gifts and seasonal merchandise.

That’s down slightly from last year’s holiday spending plans, which were closer to $720.

The chart below shows how average holiday spending has mirrored general economic conditions in the country over the past eight years:

 2004: ~$700
 2005: ~$735
 2006: ~$751
 2007: ~$755
 2008: ~$694
 2009: ~$681
 2010: ~$719
 2011: ~$704

After having grown to more than $750 in the 2006/07 period, a significant drop-off was seen in 2008 and 2009. With the recession bottoming out, this was followed by a tidy little jump in holiday spending 2010.

But just like the rest of the economic picture, things have stalled since then – or pulled slightly back.

In another recent survey, Ipsos Public Affairs has found that women are more likely than men to be planning to cut back on their holiday shopping outlays … as are people over age 35 compared to younger adults.

With consumers continuing to watch their wallets, it’s no surprise that many are taking advantage of savings opportunities. In the Ipsos survey, half of all respondents reported that they had used magazine coupons within the previous 30 days, and there was significant usage of online savings vehicles as well:

 Magazine or newspaper coupons: ~50% have used in the past 30 days
 Loyalty cards or in-store promos: ~47% have used
 Printable coupons from the web: ~28% have used
 Online “daily deal” coupons: ~27% have used
 Online coupon codes: ~25% have used

Despite the slightly lower figures for intended holiday spending in 2011, the National Retail Federation’s survey finds that nearly 40% of consumers will have already started their holiday shopping in October. A similar 40% plan to start shopping in November, while the remaining 20% won’t begin their shopping activities until September.

[A slim ~4% represent those procrastinators who don’t plan to start any of their shopping until the last two weeks of December; I think most of us all know at least one person who falls into this rarified category.]

And if you’re wondering how the average shopper plans to allocate his or her holiday spending this year, it comes as little surprise that shopping for gifts for children and other family members represents well over half of the value of planned purchases:

 Gifts for children, parents and other family members: ~$403
 Gifts for friends, co-workers and others: ~$112
 Holiday-related food items: ~$97
 Holiday decorations: ~$47
 Greeting cards: ~$27
 Flowers: ~$18

What about you? Do your holiday shopping plans for 2011 mirror what the NRF survey found?

Shopping in the Internet Age: Let’s Make a Deal

Consumers love their online dealsI hear the complaint often that e-mail has become the preserve of “deal a day” promotions and communications from brands that have devolved into little more than breathless announcements about discounts that are “too good to pass up,” coupled with the obligatory “free shipping” pot-sweetener.

And then the next day, another deal shows up that’s practically the same as the last one …

But how surprising is this, really? Let’s not forget that daily newspaper advertising – the equivalent antecedent to e-mail marketing, has always had a similar focus on price, sales and deals.

It’s just that with e-mail, it seems more ubiquitous because they’re being pitched to us hourly on any number of digital platforms and mobile devices, rather than just once a day with the newspaper delivery.

And there’s no doubt that the sheer volume of deal activity is growing – the low cost of e-mail marketing makes sure of that. Not only is seemingly every consumer brand out there working the e-mail channel like they did catalogues and newspaper advertising in the past, there’s also the bevy of coupon marketers like LivingSocial, Groupon, Yipit and Gilt City, to name just the top few.

Some have discerned a decline in the “quality” of the information that is being provided; whereas there may have once been some educational, informative or “cool” content included along with the special deals, now it’s often devolved into nothing but “price, price, price” and “savings, savings, savings.”

The extent of consumer interaction with “deal-a-day” websites and e-mail offerings was quantified recently in consumer research conducted by Yahoo and Ipsos OTX MediaCT. The survey, fielded in February 2011, discovered that U.S. adults who are on the Internet subscribe to an average of three daily or weekly shopping e-mails or e-newsletters. (And more than half subscribe to two or more.)

How often are people reading these e-communiqués? With daily regularly, it turns out.

Nearly two-thirds of the respondents who subscribe to at least two of these “daily deal” e-mails or e-newsletters report that they read all of the messages that are sent. Here’s how reading frequency breaks out:

 Read several times per day: ~22% of respondents
 … Once per day: ~38%
 … A few times per week: ~23%

 Read once per week: ~7%
 … A few times per month: ~5%
 … Once per month or less: ~5%

The same Yahoo/Ipsos survey measured the degree of pass-along activity, which is one of the most potent aspects of e-mail marketing. Most recipients reported doing this – about 45% doing so on a weekly basis or more frequently:

 Forwarding deals to friends or family several times per week: ~17%
 … Several times per day: ~12%
 … Once per day: ~10%
 … Once per week: ~6%

 Forwarding once per month or less frequently: ~19%
 … Never doing so: ~22%

Despite the complaint commonly heard about groaning e-mail inboxes, the Yahoo/Ipsos survey gives little indication that consumers are in reality becoming all that tired of the onslaught of daily deal promos. In fact, over six in ten respondents in the survey reported that they subscribe to more of them today compared to last year.

Moreover, nearly half of the survey respondents reported that they’re excited to receive them … and that they “can’t wait” to see the latest deals being offered each time.

There’s another way we know that these deals are retaining their relevance: Three-fourths of the respondents reported that these types of e-mails come to their main inbox rather than to a separate account they’ve set up to receive such offers. So there’s little doubt that when people say that these deals are desirable, they actually mean it.

We consumers do like our deals, don’t we? And if you think that the popularity of deals and discounts is due to the recession, that’s belied by the fact that even America’s super-affluent are on the deal bandwagon. Unity Marketing’s recent survey of the wealthiest 2% of Americans — those earning $250,000+ per year — finds that value-priced Amazon is the top shopping destination for ~45% of them. Not only that, ~10% use Groupon for coupons and ~8% use Craigslist.

No, it seems bargain-hunting is the thing for practically everyone.

The Ripple Effects of High Gasoline Prices

Shopping at home is rising along with gasoline prices.We’ve all heard the news reports about the effects that high gasoline prices are having on families who rely on automotive transportation for their livelihoods. It’s all well and good to promote the use of public transportation, but when your job is 25 miles away along suburban or rural roads, it’s often impractical to adjust commuting behaviors.

We’re also reading how high gas prices are affecting other aspects of the economy, such as the rising price of food items in the grocery stores due to higher transportation costs.

To this, we can now add another consequence of the high cost of petrol. Paralleling the gas price spike has been an increase in Internet activity.

Marin Software, a leading paid search manager platform for advertisers and agencies, has performed an analysis across more than $2 billion worth of paid search marketing activity. The firm established a benchmark based on the share of activity across the Google and Bing search engines, and then studied cost-per-click activity, clickthrough rates and conversion rates.

Marin evaluated the rise and fall in the volume of clicks along with the rise of gas prices over the time period January – March 2011. Voila! It found a positive correlation between rising gas prices and increased click activity.

In a similar vein, digital market intelligence firm comScore is reporting that U.S. e-commerce sales were ~$38 billion during the first quarter of the year. That’s up ~12% compared to the first quarter of 2010. And while e-commerce volume has been up over the past six quarters, this is only the second time the growth as been in double digits.

So the premise that the higher gas prices climb, the more the propensity is to shop from home and avoid the cost of driving appears to be on target. And it’s probably being helped along by the plethora of “free shipping” offers that are also out there — along with avoiding paying sales taxes.

Looking forward to the day when gasoline prices may plateau or fall back, it’ll be interesting to see if Internet activity drops back as well. Or will more people have become used to the comfort of shopping from home in their boxer shorts – so that online activity remains at an elevated level?

I have a suspicion it’ll be the latter.

Valentine’s Day Spending: All Hearts and Flowers?

Valentine's Day is hearts and dollarsWith the recession finally receding, are we now seeing an uptick in spending for Valentine’s Day — arguably the most romantic day on the calendar?

According to a January Consumer Intentions & Actions questionnaire conducted among ~8,900 participants for the National Retail Federation by survey firm BIGresearch, American adults over age 18 will spend an average of ~$115 on traditional Valentine’s Day merchandise this year. That’s up more than 11% over 2010, and collectively represents spending of nearly $17 billion.

But we have yet to return to the levels of Valentine’s Day spending that were reached in 2007 and 2008 – the highest on record.

Jewelry appears to be the big item on the Valentine’s Day shopping list. Approximately $3.5 billion is expected to be spent in this segment this year, which is up more than 15% from the ~$3.0 billion spent in 2010.

Dining out is another popular category, but its growth is not expected to be nearly as big as jewelry’s – just 3%. The six most popular categories as determined in the NRF study include:

 Jewelry: $3.5 billion
 Dining out: $3.3 billion
 Flowers: $1.7 billion
 Clothing: $1.6 billion
 Candy: $1.5 billion
 Greeting cards: $1.1 billion

[I was surprised at the greeting cards figure. True, cards are a lower-price item compared to the other categories, but the number still seemed pretty meager. It turns out that only about half of the consumers surveyed reported that they planned on purchasing a Valentine’s card, which was lower than I thought would be the case.]

Not surprisingly, younger adults (age 25-34) are expected to spend significantly more than their older counterparts. They’re projected to spend an average of nearly $190 on Valentine’s Day merchandise compared to only about $60 spent by adults over 65.

But it’s not just because of “sweet, fresh young love” versus “tired, worn-out old love.” It’s because young couples and young parents are often buying not only for each other, but also for their co-workers … their children … their children’s friends … and their children’s teachers as well.

And here’s another statistic that won’t surprise very many people: Women will receive Valentine’s Day gifts averaging around $160, which is double the value of gifts for men.

Now, that’s a dynamic that’s likely never changed … and probably never will!

The “Skinny” on 2010 Holiday Spending

Consumer Holiday Spending
Holiday spending on the rise? Yes, but ...
The “early returns” from this year’s Black Friday retail sales are quite encouraging. Online retail sales are experiencing an even bigger bump in activity. The question is, do these positive early results foreshadow a strong holiday season overall?

Each year, Gallup attempts to answer that question in advance by conducting a poll every November in which it asks U.S. consumers for a prediction of the total amount of money they plan to spend on holiday gifts. This year’s poll findings were published this past week.

And the results? The good news from the consumer economy’s standpoint is that the average personal spending expectation has risen to $714 for 2010, which is ~12% higher than last year’s $638.

The not-so-good news is that we’re still in the doldrums when measured against most of the previous decade. In fact, only in the years of 2009, 2008 and 2002 has expected personal spending been lower than it is this year.

If we take an average of the ten years covering 2000-2009, the expected personal spending found by Gallup’s survey is $747, which means that 2010’s dollar amount doesn’t even come up to the average of the past decade.

Here’s another interesting finding from the survey: Evidently, the increase in expected holiday spending compared to last year is being driven by only a small percentage of consumers. Half of the Gallup respondents reported they would be spending “about the same” this year, whereas one third reported they would actually be spending less.

The remainder – fewer than 15% — reported they would be spending more.

And all of that activity on the Internet? We can be sure a goodly amount of it is driven by the desire to find the very best price available. And to prove that out, the latest online holiday shopping report survey from rich media firm Unicast finds that more than half of consumers are using the Web to research and compare deals between online stores and retail outlets.

The bottom line on all this: It’s a mixed picture with a slight lean on the scale in favor of optimism. Which is a darn sight more positive than what we saw in 2008 and 2009.

Happy Chris-kwanz-ukah, everyone.

The e-Commerce Hiccup

One of the bigger surprises of business in the year 2009 was how big of a hit U.S. e-commerce has taken. According to digital marketing intelligence firm comScore in its just-released report 2009 U.S. Digital Year in Review, e-retail spending in America decreased about 2% during the year to come in just under $210 billion.

This represents the first decline in e-commerce spending ever recorded.

Obviously, the economic recession was the culprit. But considering that e-commerce growth has charted above 20% annually in every year leading up to 2009, seeing an actual fall-off has raised more than a few eyebrows.

Where was the e-commerce decline most pronounced? It was in travel-related services, which saw revenues drop by 5% to ~$80 million. Not that all sectors saw decline. A few continued to experience growth during the year, including the books/magazines category which charted gains of ~12%. Online computer software purchases were also up by about 7%.

What does comScore see on the horizon for U.S. e-commerce? Is continued softness predicted … or a return to robust growth?

Analyzing the last few months of e-commerce activity during 2009 provides clues to the future: Growth looks like it’s returning. In fact, the 2009 holiday season marked a return to positive growth rates when compared against the same period in 2008.

[Granted, this comparison is made against “down” months of November and December in 2008, after the recession had already kicked in. But the pace of e-commerce activity is clearly picking up again.]

But whether it will go back to a 20%+ annual growth is still an open question.