Twin Cities shoppers plan on shopping at pre-recession levels

By Nate Gotlieb

Murphy News Service – University of Minnesota School of Journalism & Mass Communication

Twin Cities holiday shoppers plan on shopping like its 2004, according to a study by researchers at the University of St. Thomas.

The 11th annual University of St. Thomas Holiday Spending Sentiment Survey released Nov. 14 indicated that Twin Cities households plan on spending at pre-recession levels. Shopper surveys at the height of the recession — 2007 to 2009 — said they planned to tighten their belts during the holiday season.

Twin Cities’ households will spend an average of $773 on gifts this holiday season, according to the survey, up from $703 last year and $680 in 2010. This year ranked second only to 2004, when consumers said they would spend $796.

The survey indicated that Twin Cities households are optimistic about their financial futures. Ninety-two percent of respondents said their household would be the same or better off in the coming year and only 8 percent said they would be worse off.

“This is sort of a new normal,” said Jonathan Seltzer, a professor at the. University of St. Thomas Opus College of Business. “People have gotten used to the economy as it is.”

The researchers, Seltzer and Dr. Lorman Lundsten, also a professor at the Opus College of Business, surveyed 304 households in 13 metro-area counties. Respondents completed the Internet-based surveys in late October.

The professors predicted that metro shoppers will spend just over $1 billion on gifts this year, up from last year’s predicted $915 million. The previous high was $959 million in 2004.

National surveys predict a smaller increase in consumer spending. A survey by Deloitte & Touche projected a national increase of 4 percent and another by the International Council of Shopping Centers predicted an increase of 3 percent.

Seltzer attributed the discrepancy between national and local forecasts to the nature of the Twin Cities economy.

“The Twin Cities is a headquarter city, more of a service economy than manufacturing, in a region that’s doing pretty well agriculturally in terms of natural resources,” he said. “So I think it’s just a little bit better.”

Twin Cities’ retailers are optimistic about the holiday shopping season.

“We’ve seen an increase in sales as well as traffic this entire year regarding mall-wide sales, so I think that it’s just kind of continuing to snowball,” said Bridget Jewell, senior manager of public relations and social media at the Mall of America. “Consumer confidence is coming back.”

Shoppers said they plan on spending 46.6 percent of their holiday budgets in the Twin Cities’ 14 malls and shopping areas, including the Mall of America. The Mall of America ranked as the most popular metro mall this year, ousting Rosedale from the top spot for only the second time.

All of the malls face increasing competition from the Internet, however.

Shoppers plan on spending 29.7 percent of their gift budgets online, up from 7.3 percent in 2002. Of this, consumers will spend 40.5 percent on “Bricks and Clicks” sites, operated by stores such as Target, and 38.5 percent on “Internet only” sites such as Amazon.

Seltzer said that the amount consumers spend online will continue to increase. But he also said that people tend to shop online where they feel comfortable, on sites such as Target, Best Buy and Amazon.

Consumers are not only changing where they are buying but also what they are buying. The researchers ranked the relative popularity of 14 gift categories and found changes near the top of the rankings.

Gift certificates, the most popular gift category from 2007 to 2011, dropped to third, while cash rose from fourth to first. Books have steadily dropped over the past couple of years, falling from No. 2 in 2010 to No. 6 this year.

While changes in what consumers buy may vary over time, Jewell said that the recession changed how retailers do holiday business, forcing the holiday shopping season to start earlier.

“A lot of people are able to spend smaller amounts over the course of a longer period before Christmas,” she said.

 

Nate Gotlieb is studying journalism at the University of Minneapolis.

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