By James Russo, SVP Global Consumer Insights, Nielsen
The end-of-year holiday shopping season seems to start earlier and earlier each year, as retailers are already rolling out their holiday promotions. And those efforts appear to be working, as nearly one quarter (22%) of U.S. consumers report that they’ve already started their holiday shopping, according to the Nielsen’s 2013 Holiday Spending Forecast. Holiday shoppers can also be notorious procrastinators, as 60 percent say they will wait a bit before they start their shopping.
So what does this mean for U.S. retail sales this year? Nielsen expects this holiday shopping season will be marginally stronger than last year, with dollar sales rising just about 2 percent, buoyed by the strongest consumer sentiment in six years (98 on the Q3 2013 Nielsen Consumer Confidence Index).
Nielsen publishes its holiday spending forecast annually and is a reliable indicator of actual holiday spending results. In 2012, five out of five category trends as well as the highest performing category were successfully predicted. Across four key categories, there was less than a 1 point difference between the Nielsen forecast and the actuals.
However, even with the increase in overall consumer sentiment, there are still plenty of people feeling the effects of the Great Recession. Twenty percent of consumers say they have no spare cash, and 68 percent say they still feel like they’re in a recession. With respect to spending ability, 48 percent say they’re living comfortably or spending freely, while 52 percent say they’re limited to spending on only the basics.
With the economy still on many American minds, dollar amount spending this holiday season appears consistent with last year, as 30 percent of consumers from all income ranges say they plan to drop between $250 and $500 this season. Twenty percent say they’ll spend between $500 and $1,000, while only 6 percent will open their wallets wide enough to spend more than $1,000.
Consumers say they plan on giving gift cards, tech products, toys and food this year. Consumers also say they are planning on spending more this year on food, clothing, video games and cookware.
Online retailers may be the big winners this year as consumers across all income groups say they plan to do more Web shopping this year than they did last year. This preference is followed by mass merchandisers and dollar stores.
Retail channel preference differs by household income. Seventeen percent of consumers say they are planning on increasing their online shopping this season and much of that traffic will come from households earning $100,000 or more per year. Twenty percent of consumers in this group say they’re going to spend more online, compared with 15 percent among consumers in households earning $50,000 or less. In contrast, 12 percent of consumers in households earning $50,000 or less say they plan to spend more at dollar stores this year, flanked by just 4 percent of consumers in households earning $100,000 or more per year.
Economic improvement means consumers are ready to indulge again. Alcohol should drive solid sales results this holiday season. Nielsen expects beer, liquor and wine to drive between $60 million and $70 million in sales growth. Traditional seasonal fares such as cheese, jams and jellies should also see jumps in sales, while snacks and candy will drive $199 million and $95 million in sales, respectively.
The holiday season is the perfect time to indulge our favorite furry sidekicks. Nielsen expects continued growth in pet care (5.3 percent dollar growth, 0.3% unit growth) and pet food (1.4% dollar growth, 0.4% unit growth).
Consumers are also expected to lean toward healthy options this holiday season, opting for bottled water and juices over carbonated beverages and shelf-stable juices. Health conscious consumers are expected to lift vitamin sales this holiday season, driving strongest value growth ($91 million) in the department (5.8% dollar growth, 5.2% unit growth). Nielsen is also forecasting strong value growth from fresh produce (8.2% dollar growth, 1.6% unit growth), while canned vegetables will likely see more than 2 percent dips in dollar and unit sales.
The annual Nielsen Holiday Spending Forecast leverages consumer surveys of over 22,000 demographically representative households throughout the US, fielded in September and is also driven by an analysis of 92 categories, covering five departments representing over $99 billion in sales (Food, Beverages, Alcohol, Health and Beauty and Homecare).
For more information, please contact Meg Chari at Meg.Chari@nielsen.com.