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Holiday spending will come, but at a price

86 percent of consumers won't buy without a discount, 85 percent to shop at discount retailers

By Stacy Straczynski
October 22, 2009

Consumers will crack open their wallets this holiday season, however, it's going to take a considerable amount of discounting to convince them.

According to the "Accenture Holiday Shopping Survey" released on Wednesday, 86 percent of U.S. consumers reported they will not be enticed to make a purchase unless a discount of at least 20 percent is offered, with 25 percent requiring a 50 percent discount.

Ninety-three percent of consumers reported that discounts and sales would be very or somewhat important in their purchasing decisions this year. Yet consumers did report that although more will be sticking to holiday budgets this year than in 2008 (63 percent vs. 54 percent), 44 percent of shoppers said that discounts could sway them to spend more. This marks a 4 percent increase from last season.

"We have seen a 'shift to thrift' across all income levels during this economic downturn and breaking that habit will be the greatest challenge for retailers this holiday season," Janet Hoffman, managing director of Accenture's Retail practice, said in a media release. "The winners this season will be the smart retailers that use the right customer data to offer the 'value' shoppers are looking for without destroying their margins."

The majority of consumers will begin their holiday shopping early. Sixty-nine percent plan to have most of their shopping completed by December 7, and more than half (52 percent) are very or somewhat likely to shop on Black Friday, the day after Thanksgiving.

While many consumers plan to spend more than $250 this year (62 percent), the majority will look to stretch their dollar by frequenting discount retailers (85 percent). Department stores (45 percent) and specialty (39 percent), electronics (39 percent) and online-only (37 percent) retailers will also be popular options. Only 5 percent of consumers plan to shop at luxury retailers, according to the survey.

Top gifts for the 2009 season reflect a back-to-basics approach, including gift cards (59 percent), apparel (56 percent) and toys (44 percent). Grocery items, such as baked goods and wine, ranked further down the list at 22 percent, while mobile phones came in last at 6 percent.

This is a trend that has been developing for the last few years. However, retailers can still make gains if they position themselves correctly, said Marc Dietz, CMO of DemandTec, a solutions company for retailers and consumer products manufacturers.

"Retailers really need to focus on understanding their customers...If they offer a better selection and value on the items that are important to a customer than another retailer, they certainly need to leverage that in their strategy as opposed to just lowering prices," Dietz said.
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