Full Price and Poor Service Are Deal-Breakers This Holiday Season

Great customer service, high-value goods, and low-price promotions rank high on shopper wish lists this holiday season.

The temperatures may be dropping, but the holiday shopping season is just heating up. According to Brand Keys' latest survey, the projected average increase in holiday spending may reach 3 percent, matching last year's sales growth. The study, which polled 16,000 customers on their expected holiday spending, sees the potential for a small rise in retail sales, though 70 percent of respondents claim the economy is still impacting their plans.

The survey highlights respondents' habits and anticipated approaches to shopping this holiday season, which suggest extremely conservative behaviors and the desire for deals:

  • Sixty-five percent of shoppers surveyed are already searching for sales, with 60 percent using online shopping and price comparison apps to find the best deals. Fifty-six percent will rely on coupons and holiday promotions to reduce their spending.
  • Of those polled, 10 percent plan to spend more this holiday season, down 2 percent from 2010. Seventy percent of respondents plan to spend the same amount, up 6 percent from 2010, while 20 percent plan to spend less, down 4 percent from 2010.
  • Shoppers expressed similar spending intentions as last year, with the average respondent expecting to spend $824, a 2.9 percent increase from 2010.
  • The range of retail channels consumers expect to use presents a fairly wide spread. Ninety percent of respondents plan to visit discount department stores, 70 percent will visit traditional department stores, 70 percent will shop via catalog, 97 percent will shop online, and 35 percent will visit specialty stores.
  • While shoppers plan to use the full range of retail channels, each specific channel comes with expectations. Online shoppers seek sites offering free shipping and returns. Shoppers at brick-and-mortar stores will be looking for a higher level of customer service this year, with 10 percent ranking customer service as a major influence in determining where they shop; for retailers it's a differentiator that could bring in more sales, encourage greater loyalty, and raise profits.
  • Spending on gift cards continues to increase, with 92 percent of respondents planning to purchase gift cards in 2011. Clothing and accessories (70 percent) and electronics (50 percent) represent the next-highest percentage of purchases. However, projected purchase habits also indicate staying home for the holidays remains a top priority, with only 1 percent planning to spend money on travel.

Key takeaway: While location and value are key, merchandise range, store reputation, and shopping experience also play a large role in customer engagement and sales generation. Retailers are expected to focus on inventory control, discounting, sales, and promotions simply because many consumers are now putting deals before brand loyalty. Over the years, consumers have learned that there are usually lower prices somewhere else, and with 66 percent of respondents starting their holiday shopping early, many are determined to find deals before the Black Friday and Cyber Monday promotions begin. Retailers must consider these behaviors and expectations, because understanding customers and addressing their desires will ultimately lead to the higher profits retailers seek.