“Christmas isn’t sometimes called the silly season for nothing,” said Mark Higginson, Director of Analytics at Nielsen’s online division.  “Shopping centers and malls are extremely hectic and crowded this time of year, and for many consumers, online retail channels offer an increasingly appealing opportunity to shop from the comfort of one’s own home rather than battle the crowds.”

With the strong exchange rate, many Australians were expected to look to overseas web sites to make online purchases.  But Nielsen found that a mass migration to US or UK sites has not materialized; between July and October, the volume of traffic to major Australian, UK and US online retailers has remained relatively unchanged.

“Local online retailers need to be cognizant of the risk of losing shoppers to cheaper overseas sites.  When all is said and done, it will be interesting to see where the traffic points.  While we haven’t seen anything of note to date, it’s very possible that Australian consumers are simply biding their time and waiting to see what retailers offer in the way of pre-Christmas bargains, both locally and abroad,” concluded Higginson.

Despite increased optimism about the economy, the social media landscape indicates that we are in a similar place to where we were this time last year when it comes to spending; buzz about Christmas and holiday shopping is down 3% year-over-year. This activity is in line with other research at Nielsen relative to retail expectations and consumers’ personal finances that indicate modest spending from a cautious consumer base.

However, consumers are still buzzing about the gifts they’ve already purchased or are planning to buy in the coming weeks. Notably, online discussion focuses largely on offline shopping.

While online shopping has been rising over the last few years, we’re also finding that consumers are using the internet to find the best deals at retail outlets, toy stores and more. So what happens online, doesn’t always stay online in the new economy where deal hunting is driving buzz.

As consumers count down the days to the holiday season, we see two key trends emerging:

1. Parents are actively buzzing about the must-haves of the season within online communities
2. Buzz about gift cards is on the rise, largely in response to retailers’ use of gift cards as purchase incentives

Games that buzz
When analyzing the product categories shoppers most frequently discuss online, Nielsen found that kid-friendly video games generated more buzz than even the most buzzed-about toys, largely driven by highly engaged gamers. The November 15 release date for New Super Mario Bros is highly anticipated, catapulting this video game to the head of the pack in terms of buzz. Additional buzz in the gaming world has come from price drop and new model announcements for Playstation 3 and XBOX.

Zhu Zhu the next Tickle Me Elmo?
Buzz supports Toys “R” Us’ “Fabulous 15″ predictions for the 2009 holiday season, with Zhu Zhu Pets, Bakugan Brawlers and Transformers Revenge of the Fallen figurines topping the list of the most frequently buzzed about toys.

Shoppers deem Zhu Zhu Pets the hot toy of the season as parents swap stories of empty shelves and elevated prices at retailers. An emerging Zhu Zhu market has also sprung up on eBay. Strong buzz on LeapFrog’s educational toys are a holdover from the 2008 holiday season; parents are especially interested in the Leapster and Tag Reader product lines this season.

Gift Cards buzz is on the rise, buoyed by incentive programs
A growing proportion of online conversation focuses on gift cards—including gift cards awarded as purchase incentives (15% growth in buzz year-over-year, September 2008 vs. September 09). Amazon.com and Toys “R” Us have experienced the largest year-over-year growth in buzz about gift cards of the retailers and brands measured.

This increased interest in gift cards is largely driven by retailers bundling gift cards with purchase incentives. Gift card bundles essentially provide shoppers with two sets of gifts: the original purchase and the gift card which can either be given as a gift or used to buy more holiday presents. These incentives tend to generate a sizable amount of discussion online—especially when tied to the gaming category. For example, Amazon.com recently coupled a price break on Wii with a $25 gift card, generating a surge in online conversation about Amazon.

Retailers who do not currently use gift cards to encourage purchases may want to consider taking advantage of this growing opportunity during the holiday season.

Related: Watch Nielsen’s Ken Cassar Discuss Online Holiday Sales CNBC

Last November and December, supermarket shoppers in northern markets like Hartford and New Haven, Conn. and Buffalo and Rochester, N.Y. spent almost one-third more, percentage-wise, on baking supplies than average American consumers, Nielsen reports.

During the same period, shoppers in southern markets like Birmingham, Ala. and Memphis dominated sales of flour, spending 106% and 78% more, respectively, than average Americans.

Consumers in Memphis and Birmingham also dominated sales of sugar, spending 57% and 46% more, respectively, than average Americans on that most basic of holiday baking ingredients, according to Nielsen.

West Texas, Little Rock, Ark., Nashville, Tenn., and Atlanta were also among the top markets for flour and sugar sales.  Shoppers in these markets spent 30% to 52% more on flour, and 19% to 28% more on sugar than average Americans.

Top 10 U.S. Markets: Baking Supplies

Top 10 U.S. Markets: Flour

Top 10 U.S. Markets: Sugar

Nielsen’s Dollar Sales Index reflects a category’s share of total dry grocery sales for a Nielsen market versus the total U.S., using supermarket dollar sales over the most current 52-week period.

The Memphis market’s index of 157 for the Sugar product category, for example, reveals that supermarkets in that particular market sell 57% more sugar, relative to total dry grocery purchases, than the national average.