While spending projected to increase by 3.4 percent, downtown Minneapolis drops to 10th on list of top shopping destinations
The University of St. Thomas’ annual survey of consumer holiday spending intentions suggests good news for area retailers. According to its findings, consumer purchase intent is back up to levels not seen since before the recession.
“It’s going to be a better year for retailers,” said Dr. Dave Brennan of the University of St. Thomas. “Our forecast is more positive than the national forecast.”
The 10th annual University of St. Thomas Holiday Spending Sentiment Survey was conducted by Brennan, Dr. Lorman Lundsten and Dr. John Sailors from St. Thomas’ Opus College of Business. The survey polled 358 metro area households online about how much they plan to spend, where they planned to spend it and what they plan to purchase.
Average household spending is projected to increase by 3.4 percent, while total spending versus last year is projected to improve by 4.6 percent.
“It’s a 4.6 percent increase, which is down from last year, but still a healthy increase,” Brennan said.
According to the survey, area households are predicted to spend $703 on gifts this year, up from $680 in 2010. The lowest reported spending level was $637 in 2009 and the highest $796 in 2004.
The St. Thomas survey suggests that shoppers in the metro area are more optimistic than the national average. The average household spending increase of 3.4 compares to 2.5 to 3 percent nationally, as projected by Deloitte & Touche. The National Retail Federation projects an increase of 2.8 percent, while the International Council of Shopping Centers reports a projected 2.2 percent increase.
Local retailers hope for the best
Reports from local retailers seem to suggest that the projections will prove accurate.
“I feel like it’s going well. We’re starting to get busier,” said Jessica Smith of the Northeast gift shop I Like You. “I think because it’s been so warm people haven’t been thinking about Christmas shopping. I know I haven’t. But it’s five weeks away. I think suddenly as soon as it gets cold, people realize they have shopping to do. Maybe that’s part of it.”
Pacifier owner Wing Witthuhn offered up a similar sentiment. “We are off to a stronger start than last year,” Witthuhn said. “It’s interesting — our online sales have declined a bit, but our in-store sales have improved. I do think more customers are making a conscientious effort to support local businesses, and we appreciate that.”
Gift cards top shopping lists
As to what shoppers will buy this year, gift cards were ranked as the most popular purchase, followed by clothing, travel, books, computer and related items, entertainment and video games. This year’s survey was the first to include travel as a category.
Malls will see the bulk of the shopping traffic this year, with 53.1 of shoppers’ budgets spent there, compared to 16.7 percent at non-mall stores. Dr. Brennan pointed out that non-mall stores tend to be discount retailers that draw less gift shopping. The survey did not inquire about shopping intent at independent retailers versus chains.
Positive data and anecdotes aside, the survey offers no guarantee for retailers. St. Thomas has never conducted a follow-up survey, so the team doesn’t know how closely purchase intent translates to actual spending.
“It would be nice if we could get money from the Dean to do a post survey,” Brennan said. “These are intentions, not actual spending.”
Regardless, the statistics are encouraging. While 31.3 percent plan to spend less than last year, 58.7 percent of those polled plan to spend the same amount as last year. Even more encouraging is the fact that 10.2 percent of respondents plan to spend more than last year, up two percent from 2010.
The decline in intended spending started in 2007 and dropped by more than 10 percent in 2008. Purchase intent increased by eight percent in 2010. This year continues the upward trend, albeit by a smaller margin.
Rosedale most popular shopping destination
Rosedale Mall was ranked first on the list of destinations survey respondents plan to visit for their holiday shopping, followed by the Mall of America. Downtown Minneapolis slipped as a destination, down to 10th place from seventh last year.
Brennan said Rosedale’s position as the most-shopped destination, which it also earned last year, is largely because of its location. “It is the closest mall to more people in the metropolitan area,” he said. “It’s the closest to both downtowns, but it’s also at the apex of Highway 36 and I-35W. It has a greater geographic draw because of that ease of being able to get to that shopping center.”
By the numbers: 2011 projected Twin Cities holiday spending
Average household spending
Average household spending increase, compared to 2010
Total Twin Cities metro holiday spending
Total Twin Cities metro holiday spending increase, compared to 2010 (household-adjusted)
Source: University of
St. Thomas Holiday
Spending Sentiment Survey