PwC: Cautious shoppers to spend an average of $684 this holiday season, down 7.5% from 2013

NEW YORK — The 2014 holiday shopping season will be characterized by cautious spending, while economic realities create one of two American holiday shoppers — survivalists and selectionists — according to a new report released Tuesday from PricewaterhouseCoopers U.S. and Strategy&, titled "2014 Holiday Outlook: Top trends, consumer behaviors and implications for retailers."  The report was based on a survey of more than 2,000 shoppers nationwide.

1. 
   Shoppers express strong overall concerns about holiday shopping, as they remain cautious on the economy with 72% believing a same or worse environment when compared to the year before. And these shoppers are reluctant to increase spending, as 84% plan to spend the same or less than in 2013. The key economic drivers influencing their holiday shopping decisions include: limited disposable income (64%); the rising cost of living (61%); and insufficient salary (37%). As a result, household spend levels are projected to slightly decrease in 2014;
   
    


2. 
   The 2014 holiday shopper is segmenting into two distinct groups: survivalists and selectionists. Survivalists – those generally making under $50,000 per year – represent 67% of American shoppers (up from 65% in 2013 and 63% in 2012). They are constrained by daily cost of living and apply the lens of affordability to all purchases. The average household holiday spend for this group is $377. Selectionists – those generally making more than $50,000 per year – represent 33% of American shoppers (down from 35% in 2013 and 37% in 2012). They make careful decisions based on their disposable incomes. This group’s average household holiday spend in 2014 is $978;
   
    


3. 
   Spending drivers are clearer than ever this holiday season. As many as 84% of shoppers cite best prices as the main reason for choosing a place to purchase gifts (up from 74% in 2013). Deals rank second, with 43% of shoppers saying they will shop based on frequency and quality of seasonal deals. In addition, the share of online will continue to grow as shoppers seek convenience and value. Half of the spending is projected for physical stores (down from 55% in 2013), with 43% of spending done online (up from 42% in 2013). Almost 60% of spending will be on gift cards, the hottest category next to clothing this year;     
   
    


4. 
   Expect more channel fragmentation as shoppers budget for not only dollars, but their time. Giving consumers the right omnichannel experience is essential. That means allowing shoppers to move easily across channels, giving them many options to choose and buy, while providing retailers visibility into inventory and pricing. Omnichannel has come of age this holiday season and 2014 could be the turning point when consumers make online pre-planning an integral part of their holiday shopping tradition. As many as 41% of shoppers plan to increase online spend in 2014 over 2013. This season, three distinct omnichannel shopper profiles will emerge: tradeoff shoppers (39%) will shop around extensively and buy online if it’s cheaper; transitionalists (29%) will shop online a bit, but generally prefer traditional stores; and digitalists (32%) will make online the “go to” channel for most discretionary and planned shopping;     
   
    


5. 
   It will be important to understand the cash/credit position of shoppers during the entire season. Spending will be concentrated during four periods: pre-Thanksgiving, Black Friday, Mid-Holiday and Post-Holiday. The 2014 holiday shoppers are planning their holiday spending in four very distinct waves. Wave one includes the early holiday shoppers, where 21% of all holiday spend will occur from now through the Thanksgiving weekend. Survivalists plan to spend $86 in this wave, while selectionists plan to spend $202. Wave two encompasses the Black Friday period – 21% of spend will occur over the week of Black Friday. Survivalists plan to spend $84 in this wave, while selectionists plan to spend $205. Wave three includes the mid-season spending frenzy, where 50% of the holiday spend will happen between Thanksgiving and Christmas with a significant portion of that spend in the last ten days before Christmas. Survivalists plan to spend $184 during this period, compared to $489 for selectionists. Wave four is post-season deal seeking, with 8% of holiday spend projected to be after the holidays as shoppers continue their “affordability” journey. Survivalists plan to spend $23; selectionalists plan to spend $83. Getting promotions well-timed and relevant to shopper spend profiles is critical;
   
    


6. 
   The 3 S's of shopping — searching, showrooming and selection — have become permanent. A new Thanksgiving ritual of shoppers going online to prepare their “holiday shopping plan” has emerged and may be the most significant shopping pattern change this season. As affordability and disposable incomes become major considerations, there will be a lot of planning around where and what to buy and how much to spend over the Thanksgiving weekend. Almost half of shoppers plan to search, showroom and purchase on Thanksgiving morning. And 50% of all shoppers plan to shop during Thanksgiving/Black Friday to grab the best deals. The “early bird tradition” continues with 75% of Black Friday shoppers going to stores. The Black Friday channel choices of these shoppers include mass merchants (80%), department stores (68%) and major online retailers (70%);
   
    


7. 
   Shoppers are clear about what they will spend their holiday dollars on, making it critical for retailers to differentiate within those categories. These five categories are at the core of the holiday 2014 wish list for both survivalists and selectionists: everyday clothing (61%), gift cards (58%), traditional toys (39%), personal electronics (36%) and media and entertainment (31%);   
   
    


8. 
   Shoppers recognize that experiences are beginning to count just as much, or more, than gifts. Holiday family get-togethers and family occas