Consumers Tighten Their Purse Strings This Holiday Season--Fuel Costs Putting a Damper on Shopping Plans

New York, November 23, 2005—GfK NOP today announced results from its annual Roper Reports® Holiday Shopping Outlook, finding almost half (45%) of Americans expecting to spend less this season compared to 2004, and only 8% of consumers saying they will spend more.

Fluctuating fuel prices are having a significant impact on consumers as they enter the holiday season. More than half (57%) of respondents state the cost of fuel is hurting their household a lot, and a majority (56%) say they will spend less money on gifts as a result. Americans plan to spend an average $780 on gifts for friends and family, down $78 from 2004. While spending is down, shopping lists remain steady with consumers on average purchasing gifts for 11 people again this year.

"With all the recent noise around heating prices, Americans are feeling the pressure, and it's showing in their spending plans," says Cary Silvers, vice president of GfK NOP's Roper Reports division. "There was a twenty percentage point increase this year compared to last in the number of consumers who say they plan to spend less. As the holiday shopping season kicks off, only 12% of Americans believe now is a good time to buy (October 2005 reading)—the lowest number we've seen in five years. Faced with fading consumer confidence, we may see the traditional battle-of-the-best-holiday-deals reach new heights this year."

Give the Gift of Choice...Gift Cards Top Shopping Lists

The Holiday Shopping Outlook found that a majority of consumers, struggling with what to get Aunt Mae or Grandpa Joe, are turning to gift cards as a way to please those hard-to-shop for friends and family members. Nearly two-thirds (62%) plan to give the gift of gift cards. While gift cards simplify shopping and ensure timely giving, they drag out the sales process when it comes to redemption. Only 11% of consumers use gift cards within one week of receiving them, and half (52%) of Americans wait to redeem gift cards thirty days or longer. Among those who waited one month or more, 30% admit they waited because they could not think of anything to buy, 19% waited for sales, 14% forgot they had them, 13% wanted to treat themselves at a later date, and 11% waited for something new to come out.

"Gift cards are quick, easy to buy and a simple way to please even the most difficult people to shop for," says Silvers. "However, gift cards can be a double-edged sword for both consumers and retailers. Americans sometimes find themselves forced to shop in stores they don't frequent, or end up losing or not redeeming the cards on time. For retailers, store-specific cards can be a windfall to year-end numbers, but they lose out when consumers use them as a way to hold for sales."

The following illustrates the gift categories participants say they will likely purchase from this season.

Online "Santa" Still on the Rise

E-commerce is making strides again this holiday season. Exactly one-third (33%) of respondents plan to purchase gifts online this year, up from 26% in 2004 and 20% in 2003. Additionally, 28% of Americans say they plan to shop more frequently online in 2005, compared to 22% last year who said they'd increase e-shopping.

Extended Holiday Shopping Season

The study also found that Americans aren't as drawn to "Black Friday" as many retailers think. Most consumers, 54%, finish their holiday shopping in the three weeks leading up to Christmas. Less than one quarter, 17%, say they will hit stores just days after Thanksgiving, 13% plan to finish their shopping early—before November 24, and 10% wait until the 11th hour to wrap up their holiday errands, dashing to stores on Christmas Eve.

"It seems there is a disconnect between the most important day for retailers and the best shopping days for their customers," adds Silvers. "If retailers want to close out the fiscal year with a bang, they must bridge this gap by creating new ways to entice earlier shopping."

The GfK NOP Roper Reports® Holiday Shopping Outlook was conducted in October of this year among 1,000 Americans ages 18 and up.