New York, October 21, 2003 — A shift in consumer confidence and optimism will be driving improved spending this holiday season, according to Deloitte’s 18th annual consumer survey of holiday retail spending. According to the more than 17,000 responses collected, shoppers point to a total holiday retail spending climb over 2002. Deloitte expects non-auto holiday sales to increase in the six to seven percent range. The survey identified four key consumer trends:

• Consumers say they are optimistic about spending.  For the first time since 2000, consumers are willing to spend more this year than they did in the prior year.
• Young shoppers are choosing traditional department stores.  While all age groups reported stronger interest in shopping in department stores, it was the young age group that showed the sharpest increase, with 56 percent choosing such venues, up 15 percentage points from last year.
• Consumers are expanding and extending their holiday shopping experience.  Increasing use of gift cards, shopping after December 25, and purchasing a more diverse array of products and personal services — such as ethnic foods, home improvement products, spa treatments and travel — than they have in the past, shoppers are changing the traditional holiday season.
• Shoppers are redefining convenience.  In-store amenities, extended store hours, gift cards/certificates, and the Internet are just some of the elements that consumers will seek to help ease the stress of holiday shopping.

"The holiday season is back," said Tara Weiner, National Managing Partner of the Consumer Business Practice at Deloitte, one of the nation’s leading professional services firms. "Consumers have spoken out loud and clear in this year’s survey as to how they define today’s shopping experience. They’re telling us their holiday spending decisions will be influenced by convenience and value and not just the lowest price. The successful retailers this holiday season will be those who have figured out how to offer the ideal shopping experience for today’s consumer."

The return of optimism
After two years of hesitant spending, consumers now say they are more willing to open up their wallets. Two thirds, 67 percent, of respondents say they will be spending more or the same as last year. This figure is up from 64 percent in 2002 and 66 percent in 2001.

"The breadth of consumer spending is great news for retailers and the larger economy," noted Weiner. "This survey tells us that consumers will be spending more money, over a longer period of time, on a wider array of goods and services.  This should translate into a good holiday season, with some non-traditional trends contributing to the success."

Popular shopping destinations
Shoppers will be visiting a wide array of shopping destinations, but discount stores continue to be favored among consumers. Seventy percent of consumers plan to shop for gifts at discount department stores. The traditional department store, however, is receiving renewed interest. Half of consumers plan to shop at traditional department stores, up from 37 percent in 2002. Dollar stores continue to show up as a popular shopping destination; 22 percent will shop there this year, a gain of two percentage points over last year. Additional key findings regarding shopping destinations include:

• Renewed interest in traditional department store.  Traditional department stores have gained a firmer foothold among retail outlets, ranking third after discount department stores and the Internet, up from fourth last year. A large part of the increase stems from younger shoppers.
• Private label.  Through private label merchandise, traditional department store retailers and others are competing effectively with national brands and drawing in shoppers. Eighty percent of shoppers said they plan to give private label products as gifts this holiday season, and 83 percent are buying them for their own use.
• Internet shopping.  Shopping on the Internet continues to increase in popularity. It is the second most popular destination, after discount department stores, among shoppers: 56 percent say they plan to shop on the Internet this season. Further, respondents say they will likely spend about 21 percent of their total holiday budget on the Internet this year. And, more than a third will do some of their Internet shopping while at work. Thirty percent will likely shop on Ebay this holiday season.

"The heightened interest in shopping in the traditional department stores is news this year, especially the strong increase from the young shopper over last year," said Weiner. "The interest in private label, mostly apparel, is also notable, both as a gift choice and a self-purchase. The private label trend is likely adding to the department store appeal — especially with the young consumers."

This holiday season:  Longer and wider
As consumers see a brighter future, they have also broadened their holiday season spending. Traditional gift items such as apparel, CDs and DVDs will remain on their holiday shopping lists, as consumers expect to buy 22 gifts this year, the same number as last year.

However, entertaining, sprucing up the home and even splurging on items for themselves are other areas where consumers will be spending more holiday dollars. In fact, consumers said they expect to spend 17 percent more than last year on home improvements and 15 percent more on socializing away from home.

As in past surveys, consumers in the Northeast say they will spend the most of any region this holiday season, followed by respondents in the South. Shoppers in the Midwest and West say they will spend the least. Key findings of broader spending include:

• Ethnic foods.  The increasing diversity of the U.S. population is prevalent in holiday spending. Consumers expressed a strong interest in ethnic foods. More than a quarter, 28 percent, will buy ethnic foods as gifts. Further, 53 percent are buying these items for themselves. The strongest interest in ethnic foods was in the West.
• Home improvement.  Home improvement stores are becoming more popular with shoppers as a holiday shopping destination, with 24 percent of consumers planning to shop at home improvement stores this season.
• Personal services.  Spa treatments, manicures and travel continue to gain favor. This year, 23 percent will purchase personal services as gifts, up significantly from 2000’s nine percent.

Consumers will also extend their holiday shopping window. On average, 58 percent of shoppers will do some gift buying after December 25. The younger shoppers, those under 35 years of age, are driving this trend. Contributing to this trend is the growing popularity of gift cards, which are often used in post-holiday shopping.

Consumers take action with their wallets and seek convenience
Survey respondents say that the most important reason for choosing a shopping destination in one that is "most convenient for me." This sentiment was followed closely by "has best value for the money." Additionally, in-store conveniences, such as extended store hours and shopping carts, are important to a majority of the respondents. More than half of respondents spoke of the importance of extended store hours, while 45 percent cited the importance of shopping carts.

A key finding on consumer convenience includes:

• Gift Cards/Certificates:  This year, 60 percent of respondents plan to buy gift cards/certificates, up 11 percentage points from 2000. The strong growth in purchases of gift cards/certificates over the last several years stems from the added conveniences to all parties — the time-pressed shopper, the recipient who obtains the gift of choice, and the retailer, who handles fewer returns, is likely to secure a sale that is worth more than the value of the gift card, and benefits from post-holiday consumer spending.

"As consumers start to open their wallets, with strong, clear intentions and preferences, there is a lot of opportunity for savvy retailers to respond," concluded Weiner. "And given the broad spectrum of where they’re shopping, why and for whom, there’s every reason to believe that this holiday season will be a little different and much better than recent years."

About this survey
The Deloitte Consumer Survey, which is designed to measure consumer expectations about the year-end holidays, is conducted by Deloitte in the fall of every year. This year's survey polled 17,035 consumers, comprising a representative sample of the population. It was conducted on the Internet by an independent research company from September 18 through September 25, 2003. The poll has a margin of error of plus or minus three percentage points. PowerPoint slides summarizing the survey data in graphic format are available upon request.

About Deloitte
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