COTTON LIFESTYLE MONITOR  FAST FACTS

Supply Chain Insights: Planning For Holiday 2011

After a fairly positive back-to-school season, retail is entering into the holidays with pressures across the supply chain. Increased raw materials costs in 2010/2011 coupled with declining consumer confidence and high unemployment, means the holiday season commences with retailers seeking to identify strategies that will help them handle rising costs yet remain competitive to entice the holiday shopper.

Despite economic hardships, most shoppers have no plans to cut their holiday gift spending this year, but cautious consumers are planning more, shopping earlier, comparing prices more diligently, and budgeting their time and money more carefully. Gift cards still top the list of holiday gifts, but clothing like T-shirts, jeans, sweaters, and sleepwear continue to be consumer favorites. Even though they plan to spend the same amount as last year, with the Consumer Price Index up 3.9%, higher retail prices may mean the consumer will not be able to buy as much.

PLANNING FOR THE SEASON

Planned holiday purchases are on the rise — 78% of consumers say they are planning their holiday shopping ahead of time this year, up from 73% in 2010. Fewer consumers report that they will start shopping on Black Friday (the traditional start to the holiday shopping season), but more consumers report shopping throughout the year (24%, up from 17% in 2010). Regardless of when they start shopping, 37% of consumers say they will still take advantage of the sales on Black Friday and Cyber Monday to help stretch their budgets.

This year, shoppers plan to spend nearly $500 for all of their holiday gifts. Just because shoppers are planning more does not mean they are going to spend less. In fact 64% of consumers say they will spend the same amount of money on holiday gifts this year as they did last year. Consumers who shop throughout the year and before November plan to spend more, on average, than post- Black Friday shoppers ($557, compared to $365). This is most likely due to shoppers’ ability to buy gifts gradually and extend their spending over a longer period of time, allowing them to budget for expenses more carefully.

Demographically, shoppers ages 56 to 70 report that they will spend the most, with an average of $737 in holiday shopping expenses. Likewise, shoppers with incomes of $75K or greater report that they will spend just over $700 on holiday gifts this year; however, they are also more likely to hold their spending flat from last year. These consumers also say they will stick to their holiday shopping lists, and the majority (64%) plan to purchase gifts with credit cards.

TOP HOLIDAY GIFTS

Gift cards continue their reign as the top holiday gift this season. Sixty-three percent of consumers prefer to receive a gift card instead of an actual gift, and 68% of shoppers are planning to buy gift cards for others this season. Clothing ranks second on holiday shopping lists, with almost half (49%) of shoppers planning to purchase clothing as gifts this year and of those who plan to buy, will spend an average of $169 on such purchases.

For consumers who say they do not plan on buying actual clothing as a gift this holiday season, more than one-third (36%) plan on buying clothing store gift cards. Gift cards provide a safer option as many shoppers find it difficult to buy clothing for others. Some of the main reasons people say they do not buy clothing as gifts is because they do not know what styles others prefer (34%), or they are concerned about getting the right size or fit (23%).

CLOTHING DESTINATIONS

Where consumers are shopping for clothing gifts this season is reflective of their careful planning, as most consumers (60%) say they plan to shop at mid-tier department stores and mass merchants, where they can stretch their budgets and shop for multiple people at one time.

HOLIDAY CLOTHING FAVORITES

Online stores rank third among the top places shoppers will purchase clothing gifts, and overall, 84% of consumers say they will shop (browse or buy) online this holiday season. Many will use online stores to make more informed purchases by comparison shopping and reading product reviews. The majority (80%) of shoppers plan to use a computer or laptop for online holiday shopping, 11% will use their mobile/smart phone, and 7% plan to use a tablet device. For consumers who will use their mobile devices or smart phones, most plan to use the devices to comparison shop (82%) and locate stores (56%). Twenty-eight percent plan to use their devices to buy gifts.

Among consumers planning to purchase clothing as gifts this holiday season, their preferences are for cotton favorites like T-shirts (44%), jeans (34%), sweaters (28%), and sleepwear (27%), which have historically been the most popular items for holiday clothing purchases. With increased clothing prices and limited budgets, consumers have postponed purchasing core clothing items they normally would buy throughout the year, leaving a gap in their clothing wardrobe. Clothing will be in high demand for the holidays, with 61% of consumers saying they would like to receive clothing as a gift this year, whether in the form of actual apparel or a gift card. With clothing stores as a top destination for gift card purchases, clothing retailers should see positive returns for both holiday and post-holiday spending.

ABOUT THE SURVEY
Cotton Incorporated Lifestyle Monitor™ survey is a monthly online research study that gauges the attitudes and behaviors of U.S. consumers regarding clothing, appearance, fashion, home furnishings, fiber selection, and other topics. Each year, 6,000 consumers are surveyed, 60% female and 40% male, aged 13 to 70, and representative of the U.S. population based on ethnicity, income, education, and geography.