Twin Citians plan to spend about 10 percent more on gifts this holiday season than they planned to spend last year, as local holiday budgets appear to be returning to pre-recession levels.
 
That’s according to the University of St. Thomas’ 11th annual Holiday Spending Sentiment Survey, which was conducted in late October and measures local shoppers’ planned spending. A total of 304 households responded to this year’s survey.
 
The study found that Twin Cities residents plan to spend $773 per household on holiday gifts this year, up from $703 last year, $680 in 2010, and $637 in 2009. The highest expected spending on record was $796 in 2004.
 
St. Thomas researchers predict that metro-area shoppers will cumulatively spend more than $1 billion this year, up 9.3 percent from last year’s predicted $915 million. This year’s anticipated spending surpassed the record $959 million that shoppers planned to spend in 2004.
 
A decline in planned holiday spending started in 2007 and was particularly dramatic in 2008, when shoppers planned to cut budgets by more than 10 percent as compared to the previous year. The turnaround started in 2010 and continued last year, when shoppers said they planned to boost spending by 3.4 percent.
 
Eighteen percent of survey respondents plan to boost spending this year, up from 10 percent last year. In 2008, only 4 percent of local shoppers expected to increase holiday spending.
 
Meanwhile, 21 percent of local shoppers said they intend to spend less this holiday season—down from last year’s 31 percent and a marked decline from 2008 and 2009, when about 54 percent of Twin Citians were planning to shrink their budgets.
 
John Seltzer, a former Supervalu vice president who teaches in St. Thomas’ marketing department and worked on this year’s study, said during a Wednesday conference call that the 10 percent jump in planned spending might represent a “new normal.”
 
People have grown accustomed to a slow-growth economy but see that “the wheels haven’t fallen off the bus,” and they have decided “we’re going to go ahead and spend,” he added.
 
The survey included additional positive indicators about the local economy: 92 percent of respondents said that their households will be the “same or better off financially” in the coming year; only 8 percent expect their situations to worsen.
 
What Will Be Bought:
 
The St. Thomas survey also asked where shoppers plan to buy holiday gifts and what they intend to purchase. Cash has become the most popular gift item, followed by clothing and accessories, gift certificates, travel, computers and related items, books, toys and hobby items, entertainment, video games and related items, furniture and home furnishings, sporting goods, cell phones, consumer electronics, and jewelry.
 
Lorman Lundsten, chair of the marketing department at St. Thomas’ Opus College of Business and a researcher involved in the study, said Wednesday that higher-income households were particularly inclined to boost cash and gift-certificate giving this year.
 
The mix of spending resembles last year, although gift certificates were displaced from the top spot after topping the list for four consecutive years. Most categories held relatively steady, although furniture and home furnishings climbed from 14th to 10th place with respect to popularity. Books continued to slide, and the decline is likely related to increased e-book and tablet adoption, according to the study.
 
Where the Money Will Be Spent:
 
Shopping malls remain popular destinations, although they ceded ground to non-mall stores and the Internet in this year’s study.
 
Respondents plan to spend 46.6 percent of their holiday budgets at the region’s 14 malls and shopping centers. That’s down from 53.1 percent last year, but it remains well above the 10-year low of 36.2 percent reported in 2008.
 
Meanwhile, local shoppers expect to spend 19.5 percent of their budgets at non-mall stores this year, up from 16.7 percent last year but significantly below the 10-year high of 39.2 percent seen in 2008.
 
When asked to name two stores at which they’ll shop, Target and Macy’s were “clear winners” and tied for first, followed by Best Buy, Herberger’s and Kohl’s, the study found.
 
When asked which malls or downtowns they plan to shop at most, respondents listed most frequently, in order: the Mall of America, Rosedale, Ridgedale, Burnsville, Eden Prairie, Arbor Lakes, Woodbury Lakes, Riverdale, Southdale, Maplewood, downtown Minneapolis, Albertville, Northtown, and downtown St. Paul.
 
The Mall of America displaced Rosedale for this year’s top spot.
 
Online shopping, meanwhile, continues to gain popularity. Local shoppers plan to spend 29.7 percent of their budgets online this year—up from 26.1 percent in 2011 and four times more than the 7.3 percent reported during St. Thomas’ inaugural survey in 2002.
 
Where will the online spending occur? The survey found that “bricks-and-clicks” sites—those run by brick-and-mortar retailers like Target—will account for 40.5 percent of online spending. “Internet-only” sites like Amazon came in at a close second, accounting for 38.5 percent. “Deals” sites like Groupon will comprise 5.3 percent; “broker-facilitator” sites, such as eBay, will account for 3.5 percent.
 
When asked to name two websites at which they’ll shop, Amazon was mentioned five times more often than second-place Target. Rounding out the top five were eBay, Best Buy, and Barnes & Noble.
 
Catalogs will account for 4.5 percent of this year’s spending; it’s up a percentage point from last year but is down from the 9 percent reported a decade ago.

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