Families Slow Gift Buying, Boost Holiday Quality Time

Last year, Judy Nunez got swept away in the holiday hype. She shopped early and often - so early that by Christmas she had forgotten what she bought, and so often that her husband, Joe, said she had gone "overboard."

So this year, the Ft. Drum, N.Y., woman plans to rein in spending for her three children. "Other people I've talked to say they are going to lighten up this year as well," says Mrs. Nunez.

What's happening to the Nunezes and their friends is part of a national trend. On the whole, Americans are no longer piling mountains of gifts around their Christmas trees.

"There has been a fundamental shift in consumer buying habits for the holiday season," says Tracy Mullin, the president of the National Retail Federation. "While we still want to celebrate, instead of gift-giving there has been a shift to more family celebrations around the dinner table."

Partly as a result of this shift, surveys indicate Americans will increase their spending only moderately this holiday season. Yesterday, the Conference Board, a New York-based consumer group, released a survey indicating Americans will increase their holiday spending only 3.5 to 4 percent over last year. It estimates the average US household will spend about $465 on gifts, up from $450 a year ago.

"This does not look like a blockbuster year," says Lynn Franco, associate director of The Conference Board's Consumer Research Center. The last time retailers experienced a blockbuster year was in the 1980s when sales gains hit double-digit levels.

Economists are quick to point out other reasons the holiday season is likely to be modest as well. Consumer debt is at record levels, representing 21 percent of income. "People are borrowed up to their eyeballs," says David Wyss, an economist with DRI-McGraw Hill in Lexington, Mass. And although luxury goods, such as jewelry or expensive computers should sell well, Mr. Wyss says the stock-market dive will slow sales in that area. "Confidence has been shaken by it."

Not all bad news

There are economic reasons the holiday season won't be a complete bust: The unemployment rate (4.7 percent) is at a 24-year low, consumer confidence is high, and incomes are strong.

Against the backdrop of these economic trends, there have also been shifts in retailing. Shoppers, such as Mrs. Nunez, are buying earlier. The holiday shopping season used to begin immediately after Thanksgiving; now retailers are rolling out the tinsel after Halloween.

"A good portion of the Christmas buying is now done in the first part of November. No one did that 10 years ago," says Stan Shipley, a senior economist with Merrill Lynch & Co. in New York.

But the biggest shift is in Americans making the holidays more of a family experience. In a survey, released earlier this month, the Retail Federation found that one-third of consumers now say that gift-giving in their families is "less important" than it was several years ago while only 13 percent feel it is "more important." Many of the respondents said they were tired of the commercialism aspect of the holiday.

Instead, consumers said they were more interested in getting home for the holidays. Ms. Mullin says this means more holiday packages will contain airline tickets for family vacations.

The Camerons' new priorities

That's the case with the Cameron family in Bethlehem, Pa. Linda Cameron says they have decided to "go easy" so she and her husband, Douglas, can save money for a trip in England next summer. "You can't do both," says the interior decorator and mother of two.

Experts also say families are buying more non-traditional gifts such as vouchers for restaurant meals, golf lessons, or trips to the beauty parlor. Many families with personal computers will spend money on upgrades or new software.

And retailers are adjusting to less emphasis on holiday sales, Mullin says. "It used to be that 40 percent of your annual sales came during the holiday season, but that's not as true today."

Instead, she says, retailers are putting more focus on other periods, such as Halloween, which has now become the second-busiest selling period. "People want to get together and celebrate Halloween with their friends," she adds.

But holiday gift buying is far from drying up. This year, Americans are expected to spend about $162 billion during the period. "This is still a big chunk of the retail year," says Mullin. "It's just that we've seen a shift in thinking, attitudes, behavior, and spending patterns."