Deloitte's Retail partner Seema Pajula visits ABC7 Chicago to offer insight.
Overall forecast for this year's holiday shopping season:
More than six in 10 Chicago area consumers (62 percent) expect to reduce their overall spending this holiday season. Higher food prices, a lack of extra cash and concern about the economy were the top three reasons for spending less.
On a more positive note for retailers, Chicago consumers who received a federal government stimulus check this summer said that on average, 19 percent of their check was still not spent - meaning those funds are available for holiday purchases, if needed.
Chicago consumers said they would spend more this year on gifts ($590) as compared with last year ($541), and buy an average of 20.7 gifts this year compared with 17.2 gifts last year. However, most other major categories of holiday spending are expected to decline. Chicagoans intend to spend a total of approximately $1,400 this holiday season compared to $2,100 last year. Spending on home improvements, home/holiday furnishings, and non-gift clothing purchases is expected to decline significantly.
More than seven in ten Chicago consumers (71 percent) also plan to change the way they shop due to economic concerns. Their strategies will include buying more products on sale, buying more lower priced items, limiting/consolidating shopping trips to save on gas, and using more store coupons.
Strengths - Online shopping/gift cards/"green" shopping:
Online retailing will continue to grow this holiday season, with a record 71 percent of Chicago consumers following shoppers nationally and spending at least part of their holiday budgets on the Internet.
This popular medium for holiday gift shopping ranked #3 this year behind discount and traditional department stores. For the second consecutive year, more than one in five consumers surveyed plan to shop primarily or entirely online this holiday season, and one-quarter of total dollars are expected to be spent on the Internet
Chicago consumers are also looking for retailers to provide them with flexibility this holiday season. Almost three-quarters of Chicago consumers surveyed will, for example, conduct online research in advance of a store visit.
For the fifth straight year, gift cards are expected to be the top gift purchase. Seven in ten (72 percent) Chicago consumers surveyed plan to buy them, just slightly below last year's 74 percent of consumers.
Holiday shoppers are also planning to buy more cards on average: 7.2 cards this year, compared with the 4.8 cards they planned to buy last year. That said, recipients can expect less per gift card this year, as consumers plan to spend approximately 25 percent less on each card
Gift cards for stores/products are less popular: only 51 percent of consumers plan to buy them, compared with 58 percent last year. On the other hand, gift cards for gasoline increased to 22 percent from 14 percent, another sign of this year's focus on necessities.
The "green" movement continues to build momentum. More than four out of 10 Chicago consumers (43 percent) are willing to pay extra for green gifts this holiday season.
More than four in 10 (41 percent) surveyed say they will use fewer plastic bags from supermarkets and other stores this year - a significant increase over the 26 percent who said the same last year.
More than one in five consumers (22 percent) say they will purchase more "eco-friendly" products this holiday season than they did in the past. A similar number (19 percent) say they will consider not wrapping holiday gifts to conserve paper.
With economic concerns high, value-oriented stores are expected to be the top shopping destinations. More Chicago consumers say they will shop at venues such as discount/value department stores, warehouse clubs, dollar stores, outlet stores, and off-prices stores.
Drug stores and supermarkets also showed big increases from last year. In addition, flea markets and re-sale/used merchandise stores were cited as destinations by shoppers.
Chicago consumers are looking for value: 78 percent of consumers said the best value for the money will cause them to shop a particular retailer this season, and 77 percent said low prices. Convenient location, quality and selection of merchandise, and customer service/experience all ranked lower.
Warning on gift cards:
Be careful given some retailers may be on brink of bankruptcy (Tweeter, Circuit City).
Almost one in four (24 percent) has had at least one card expire before they could use it, and almost one in three (30 percent) are worried about the store closing before they can use a card.
Six of ten consumers have at least one unused gift card; approximately one in seven (14 percent) say they have too many gift cards, and a similar number say it's unlikely they'll ever redeem all their cards.
Shopping tips to save money or key strategies for budgeting:
Put together a budget and pay in cash
Research products prior to purchase
Sign up for coupons at your favorite store
Look for unique loyalty programs and offers
Understand terms of gift cards
Look for free shipping