Although retailers have been thinking about the 2009 holiday season since last January, consumers are just starting to think about their holiday plans. As we do every year, Nielsen fielded its annual holiday retail survey at the beginning of this month to get an understanding of consumers’ holiday shopping plans.  While the economy appears to be improving at a snail’s pace, it’s apparent that many consumers intend to spend less and save more this holiday season. In fact, some 42 percent of respondents stated that compared to a year ago they were planning on spending less money on holiday gifts, compared with only 4 percent who intend to spend more.

An even more surprising trend is that of the money that consumers plan to spend this holiday season, a smaller percentage will be spent online: 63 percent of survey respondents said that they would do at least some holiday shopping online, down 10 points from two years ago. Meanwhile, 7 percent of respondents said they would not do any shopping online compared to just 1 percent in 2007.

Consumers Expect to Spend Less Money Online this Year

Among those that do plan to shop online this holiday season, many consumers expect to spend significantly less than last year. In 2008, 42 percent answered that they would spend more than $300 online during the holiday season. This year, that percentage has dropped to just 31 percent, while 22 percent of respondents said that they are going to spend less than $100 online.

So why do some consumers shop online? Interestingly, the main reason is not to save money, but for convenience. Respondents said the top reason they would shop online was the ability to shop whenever they wanted, followed closely by the ability to avoid the large crowds associated with holiday shopping.

While consumers appear to no longer view the Internet as a value channel, they still see it as a place to do comparison shopping, find coupons and do research. And it’s not just consumers coming from lower household incomes–shoppers of all ages and income levels rely on the Internet to inform their in-store purchases. In October 2009, over one-third of the U.S. online population visited at least one deal-oriented Web site.

Although many consumers don’t feel that they save money by making purchases online, they do view the Internet as a deal-seeking venue. When asked how they use the Internet before going shopping in physical stores, 55 percent of respondents said they use the Internet to compare prices across retailers and 49 percent answered that they use the Web to learn about sales and promotions available in physical stores.

It is clear that while the majority of all purchases continue to take place offline, the Internet has an important role to play—deals found online impact holiday purchase decisions and drive purchases at brick and mortar locations.

For more information and insights on the 2009 holiday season, download our recent webinar,2009 Holiday Retail Season: What Consumers Have in Store for Retailers this Season.

Frugal consumers continue to look for deals both in-store and online. At grocery, almost one-third of purchases are bought on deal and online visits to coupon and reward web sites are surging. It’s important to take note of the demographics behind the growing numbers of online deal hunters:  Consumers visiting couponing and rewards sites tend to be women, over the age of 55, residing in smaller households, without children and their household income skews toward the affluent ($100K+).

While beleaguered shoppers will be looking for ways to make the season bright, retailers can do their part by bringing some much needed holiday cheer to the shopping experience:

1. Tempt taste buds with in-store tasting and cooking demos.
2. Savor the smells of the season with aroma therapy.
3. Lighten moods with music from local school bands or choirs.
4. Touch the lives of others by collecting food bank donations.
5. Switch out in-store TV ads with broadcasts of holiday classics.
6. Reward frequent shoppers with holiday prize drawings.
7. Partner with manufacturers on donations to local charities.
8. Enhance the décor with holiday decorations.
9. Serve up a smile and an appreciative attitude.
10. Respect staff workers with reduced holiday hours.

As the Internet and social media continue to play a critical role in how consumer make purchase decisions, tune into the webinar, 2009 Holiday Season: What Consumers Have In Store for Retailers This Season on November 16 to learn more.

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

SUMMARY: Four mega trends—convenience, Generation Y consumers becoming of age, increased broadband penetration and customization—have come together to fuel growth in the online grocery market. While the online channel is still small for the food and beverage sector, it is poised for growth. What are the key drivers behind the revitalized online grocery movement and how do consumers use the web, social media, and other online tools to plan purchases? Now is the time for retailers and manufacturers to maximize opportunities in this re-emerging market.

Since the early days of the Internet, companies have tried to capitalize on online grocery. Some have failed, some have held their own, but none have revolutionized the way consumers think about shopping for groceries. But now—almost a decade after the dot.com bubble burst—online grocery is beginning to show resurgence, powered not by venture capital dollars but by sustainable growth plans, broadband Internet and increasing consumer interest.

Online grocery shopping is poised for growth, currently at the intersection of four key mega trends:

1. Convenience—the growing need for convenience has already transformed the packaged goods industry
2. Generation Y—Gen Y shoppers are approaching grocery-buying age, and are comfortable doing so online
3. Broadband Internet—Almost two-thirds of Americans have broadband Internet access, making online grocery shopping easier and quicker
4. Customization—Digital platform allows online grocers to personalize the shopping experience

Poised for growth
With approximately $3.75 billion in online sales in 2008, online is a small but expanding channel for the food and beverage industry. Even though the majority of grocery shopping occurs offline—online purchases accounted for less than 1% of all food and beverage sales in 2008—on average, shoppers tend to spend twice as much online as offline when making food and beverage purchases.

Three variables lead to bigger basket sizes:

• Free shipping and minimum order requirements encourage shoppers to spend more
• Online grocery shoppers tend to be upscale shoppers and purchase expensive, niche products
• No heavy lifting—shoppers avoid lugging groceries

Shopper profiles
Two key differences distinguish the current online grocery shopper from their offline counterpart: income and household size. Online grocery shopping skews to upper-income “established” adults ($100K income per household) residing in smaller households (1-2 members) with no children. These consumers are more willing to pay the shipping fees and premium prices typically associated with online grocery shopping in exchange for the convenience and other benefits of online.

Time-starved large households, on the other hand, represent an untapped opportunity. Online grocers need to ensure that the process is easy and convenient enough to address the hectic lifestyles of large families.

Convenience drives satisfaction
While the majority (70%) of online shoppers reported having a positive shopping experience when purchasing groceries online, some attributes weigh more heavily than others as important drivers of satisfaction, as reported in a March 2009 Nielsen survey. The research revealed three key motivating factors that entice consumers to shop for groceries online: convenience, product selection and pricing.

Convenience—consumers like the ease of filling up a grocery cart with a click of a button any time of day, from any location. Online shoppers can stock up on staples without carrying heavy packages. Many online grocers offer automatic replenishment options so the consumer never runs out. Finally, online grocery shoppers avoid commuting, crowds, waiting in line, and inclement weather.

Product selection—virtual shelf space allows grocers to offer a wider product selection and in-depth product information, which is especially helpful for shoppers with dietary restrictions.

Pricing—comparisons are easier to do online, and running shopping-cart tallies help buyers stick to a budget and avoid impulse buys.

Frustrating fees and wait times
While shopping online has clear benefits, there are some barriers that impede acceptance. In the Nielsen survey, 65% of respondents indicated that the cost of shipping was the biggest barrier to purchasing groceries online. Additionally, a lack of control concerns some shoppers. Not only can shoppers not personally choose products, but waiting for the delivery can be perceived as countering the time-savings and flexibility of shopping online. Forty percent of consumers cited waiting for delivery as an obstacle. Other obstacles include issues with security/privacy (35%), not being able to use coupons (30%) and a perception of online as more expensive (30%).

Despite the clear benefits, many still consider online grocery shopping an indulgence—some who enjoy it seem a bit embarrassed, characterizing their decision to shop online as a form of “laziness.” As the market matures however, this perception should fade. And while most people are not accustomed to buying groceries online, this too will erode over time as Generation Y reaches grocery-buying age.

Lessons from abroad
The online grocery shopping market in the United Kingdom is more mature than that in the United States. Almost one-fifth (16%) of all British households have purchased groceries online in 2008—double that of American households. Similar to the U.S., online grocery shoppers in the U.K. tend to be more affluent. However, unlike the U.S., British buyers have larger, younger households.

Over the last three years, apprehension about online grocery shopping in the U.K. has shifted from fear of the unknown to practical matters. In 2006, the biggest barrier for British shoppers was not being able to personally choose products. This fear has decreased dramatically, and by 2009, the percentage dropped 15 points from 29% to 14%, providing a window of hope that U.S. shoppers will follow suit as the market matures. Similar to the U.S, the main concerns of British shoppers today include delivery charges and delivery time.

Successful endeavors
There are a number of initiatives that have worked successfully to boost the online grocery market in the U.K. One of the reasons online grocery shopping is more popular in the U.K. is the strong competitive market and heavy marketing support that is driven by four major national chains. Unlike in the U.S., British grocers use traditional media to promote their online shopping services—even creating ads that focus on a particular aspect of the shopping services, such as flexible delivery times.

Additionally, U.K. grocers are national chains as opposed to the mainly regional chains in the U.S., which facilitates ‘national’ pricing and makes it less confusing and easer to compete. Price wars between Tesco and Asda, for example, have driven price down and interest up. Another method used effectively includes the “switch and save” offer. Consumers are presented with similar product pop-ups offering much cheaper alternatives (usually private label brands), which have been known to achieve 40% click-through rates.

Importantly, distribution networks and availability of products have been greatly improved. British grocers are using online shopping to fill in regions where they have less brick and mortar stores. For example, Asda (owned by Walmart) has fewer stores in the southeast region and uses online shopping to fill the gap. Finally, customer service in the U.K. is strong, offering free delivery, allowing customers to choose delivery time slots, and using fewer bags to be environmentally friendly.

Making connections
The digital platform provides grocers with the unique ability to connect with and engage shoppers—value is not limited to grocers selling products online. From product selection to meal prep, shoppers are using the Internet as both an informational and inspirational tool. Online grocery shoppers are more than twice as likely as the average Internet user to read and post product reviews, download coupons, search for recipes online, and access the Internet through their phone.

Grocers can use their website to support the in-store experience by providing digital coupons, shopping lists, recipe ideas, advanced filtering by dietary needs, automated re-ordering and store availability searches. Mobile presents grocers with an additional touch point to engage shoppers via mobile coupons and grocery lists. Grocers need not be responsible for all content on the Web site; they can enlist manufacturers to maintain branded or sponsored sections of the web site. For example, a health-oriented brand could power a calorie counter on the grocer’s site, or an ingredient manufacturer might sponsor podcasts with celebrity chefs.

The bottom line is that online grocery represents a largely unrealized opportunity, but grocers must work to build awareness and establish the value proposition. The process needs to be easy and convenient, and online grocers must educate shoppers about the benefits in simple terms: buying groceries online saves time and money—two considerations that every shopper is looking for.

Download: Nielsen Online Grocery Report [pdf]

Julie Enzweiler,  Automotive Research Director, The Nielsen Company

SUMMARY: In economic terms, the auto industry was hit by the perfect storm: high gas prices, tight consumer financing, plant closings, brand reductions, dealership pruning, employee layoffs, longer vehicle retention, surplus inventory, manufacturer bankruptcies and waning consumer confidence. Despite a 37% decrease in total auto sales over 2008, bright spots persisted: the redesigned Forester revved up Subaru sales while price leaders Hyundai and Kia gained traction from new models. Online media has changed the rules of the road for auto marketing by placing consumer generated media squarely in the driver’s seat.

Unprecedented. Unbelievable. Unfathomable. The state of the auto nation is shaky at the moment, but all is not lost. Offsetting the unrelentingly negative news are 2009 highlights like a 69% spike in Sorento model sales, a 48% increase in Sedona sales, and the successful launch of the economically-priced Hyundai Genesis and Kia Soul, both targeting younger drivers.

Conversely, luxury vehicles that attract middle-aged consumers managed to outpace the market, although the category experienced a long tail effect, a two to three month delay from shopping to closing the sale. Only one domestic car manufacturer—Lincoln—outperformed the market, even though sales remained in negative territory on a year-to-year basis.

Fueling sales

The Nielsen online panel, comprising 250,000 individuals representing the U.S. online population, detected another hopeful sign for new vehicle sales based on Internet new vehicle shopping patterns. While online new car shopping downshifted by 9%, this represented a mere fraction of the precipitous 37% sales decline, suggesting the existence of pent-up demand. Consumers sought out roadworthy vehicles like the new Ford Fusion, proven gas sippers like the Toyota Prius and Honda Civic, or buttoned up their wallets and opted to maintain their current car or buy used.

Foreign automakers benefited disproportionately from escalating gas prices because of the consumer perception that their vehicles—especially hybrid and diesel models—are more fuel-efficient. German and Korean automakers realized the largest gains in online vehicle shopping activity, posting 1.7 and 2.2 percentage point share increases respectively, while their U.S. counterpart slid 5.5 percentage points. The Volkswagen Jetta and CC models, BMW 1- and 3-series and Mercedes-Benz E class were among the variants driving shopping inquiries.

Model behavior

Sport utility vehicles, with some 61 models available, continue to hold the “most shopped” position and rank number one in the U.S. for share of new vehicle shopping. Although activity waned with rising gas prices, consumers appeared to be hedging their bets, shopping longer in the hopes that gas costs would plummet and justify the purchase. And while the government is putting pressure on automakers to reduce these larger vehicles from their fleet, demand at the moment is not supporting this mandate.

The biggest disappointment among model types proved to be the basic economy vehicle, which peaked with a nearly 30% online shopping share in May 2008 when gas prices were at the highest (around $4.00/gallon), and dropped to half that a year later when gas prices declined to about $2.00/gallon.

Upper middle car models like the Fusion, Camry, Accord and Altima maneuvered into the second most shopped segment by April 2009, with hybrid variants moving the sales needle. Hybrids remain an exciting, but emerging segment, as consumers wrap their heads around the concept and take their time investigating the genre. Luxury entrants cruised along with steady sales, experiencing a boost from the Hyundai Genesis introduction. Luxury models attract aspirational buyers who savor the shopping experience and take their time to consider price before taking the plunge, elongating the buying cycle.

Trading places

Rankings of the Top 25 automakers based on online shopping activity wheeled in some interesting changes, with Kia jumping 11 slots from number 24 last April to number 13 in

April 2009. Volkswagen leapfrogged seven spots from number 15 to number eight courtesy of the CC—their most-searched vehicle on the Internet. The redesigned Forester sparked consumer interest as well and elevated Subaru to the number 22 slot, up from 27.

Saturn fell out of orbit, dropping 13 spots to number 23, followed by Buick’s 12 point decline, GMC’s six point downslide and Pontiac’s five point plunge. A heads-up to Volkswagen, the beneficiary of online buzz over the curvy CC: while initial online interest spikes rapidly, it can quickly taper off. The trick is to sustain interest over time and keep the vehicle top of mind with prospective buyers.

Setting your sites

The auto industry enjoys a relatively unusual electronic landscape, with a host of powerful, established third party shopping sites available to consumers like Yahoo! Autos, Kelleybluebook.com, AutoTrader.com and cars.com to name a few. Manufacturer or OEM web sites need to maintain a polished look and feel with robust content to stay in the game, offering complementary information and highly interactive features like build-a-car customization tools, 360° rotating car views, dealer information, engaging games that keep customers returning to the site, virtual experiences, testimonials and incentives.

While 86% of online shoppers rely on third party sites for price information, OEM sites are the preferred source for visualizing build-outs, researching special offers and obtaining financing information about tax incentives, special offers and government programs. The combined use of both third party and OEM sites actually enhances the consumer shopping experience, providing complementary rather than competing information.

Value of video

Kia Soul, one of the year’s most successful launches, earned kudos for an exciting web site that features techno pop music, robot animation, a personalized video from the chief designer about his “rhino with a backpack”  vision, a floating picture gallery, build-a-soul feature and “Escape from Hamsterdam” game, which leverages the primary advertising visual—hamsters. Of course, the under $14,000 price tag and 31 MPG green angle helped jump start things.

Video streaming is playing out across the computer screens of America, with 124% annual growth overall, and a turbocharged uptake rate of almost 200% for Ford videos. At last count, there were more than 80 million videos available on YouTube, and that video library is growing by some 200,000 clips per day. Nothing engages consumers like real-life clips from owners and test drivers sharing their experiences. In addition to posting videos on OEM sites, manufacturers can enhance both reach and impact by pushing out digital clips to social media outlets like YouTube, Hulu, iTunes, Facebook and others.

Ad impressions

Nielsen data show local magazines, national newspapers and local radio taking the biggest hit with shrinking ad budgets, accounting in large part for the precipitous 31% downtrend in total first quarter auto ad spending from 2008 to 2009. Online ad impressions ramped up during Q1 of 2009, stabilizing at approximately five billion impressions per month during the March to May period, with a correspondingly constant spend rate of $35 million per month.

Following a classic advertising paradigm, exposures may indeed be rekindling demand. Nielsen surveys suggest that “intent to buy” is rebounding from an all-time low in the Spring of 2009 to a more historic level as seen in summer’s past. It seems that consumers have been kicking the tires, but doing so via virtual showrooms.

Listen and learn

“Listening” is the new marketing. To succeed in a multi-media world, automakers will need to engage and interact with shoppers, delivering a complete experience from initial contact through post-purchase. In the process, they’ll need to leverage the power of search and social media, developing a cadre of independent reviewers and product evangelists willing to spread the word about their cars, without filters.

Search engines represent the first point of contact for many shoppers, and carmakers would do well to influence the tone of the conversation and their placement on the page one rotation. Deploy the power of Web 2.0 on OEM sites, incorporating quotes, surveys, reviews, testimonials, buyer videos, interactive games, audio and video feedback loops, special offers and incentives that hook the consumer and give them a reason to keep coming back.

So what are Power Moms doing online?  Where they spend time varies by demographic categories.  For example, “Established Moms,” those aged 40-50 with three or more children at home, are heavy online shoppers, with Shopzilla.com the most popular site.  Newbie Moms, aged 25-34 with one or two children at home, also enjoy online shopping, but social networking sites play a much more prominent role.

Power Moms all share a concern for the economy and seek money-saving strategies and solutions online and the number of conversations continue to grow. “Mom bloggers review everything from beauty products to cars to inkjets, enabling marketers unparalled reach to their target consumers. In an increasingly connected world, moms seek the wisdom of their online counterparts as trusted advisors,” said Jessica Hogue, research director, Nielsen Online.

To read more about the power these moms wield, including Nielsen Online’s Power Mom 50, a list of influential sites, click here.

Have a favorite site you think should be in the Power Mom 50? Let us know with your comments.

The trend towards shopping online cuts across most categories, with the most popular categories being airline tickets, books/magazine, clothing and other travel-related services such as hotels and car rentals.  Respondents said that the primary reason for shopping online was to compare prices and get the best deal possible.  “Saving time” and “avoiding sales staff and crowds” also ranked highly.

“It is interesting to look at the purchase conversion rates following research online.  While it is expected that there will be high conversion for airline and entertainment tickets, we also see strong results for sports equipment, collectibles, books, clothing and toys.  Further, stronger offline conversions are being found in categories such as insurance, home appliances, consumer electronics and food/beverage/wine,” said Tony Boyte, Nielsen Online Research Director.

But it was Bath & Body Works’ website – ranked ninth, with 3.56 million unique visitors – that showed the most impressive year-over-year growth: 39%. 

American Eagle (+25%) and Gap (+23%) also logged impressive gains over November 2007.

The top 10 apparel and beauty online shopping destinations, ranked unique visitors in November, are below.

Read the full article on InternetRetailer.com.

Metrostyle (23.6% conversion rate), QVC (21.6% conversion rate), Office Depot (21.6% conversion rate), L.L. Bean (21.5% conversion rate), Tickets.com (20.1% conversion rate), Blair.com (18.9% conversion rate), Lands End (18.4% conversion rate), 1800flowers.com (17.8% conversion rate), and The Sportsman’s Guide (16.8% conversion rate) rounded out the top ten.

Top online retailers in ten key product categories, ranked by purchases and customer numbers in November, are below.

Read the full article on InternetRetailer.com.

Nielsen has issued a year-end look at the most popular trends among Americans during 2008, covering everything from the top TV programs to the most popular consumer packaged goods.

William P. Young’s ”The Shack” was the top-selling fiction book through November 30.

Among non-fiction books, “A New Earth,” by Eckhart Tolle was the top-seller.

The audio version of Tolle’s “A New Earth” was the top-selling audio book of the year.

Top 10 Book Sales: Adult Fiction

Top 10 Book Sales: Adult Non-Fiction

Top 10 Audio Book Sales: Adult and Juvenile

View the press release.

Relive the greatest hits of 2008 — stay tuned on Nielsen Wire for more Tops In 2008 coverage.

Look ahead to the new year with Nielsen Wire’s 2009 Industry Outlook series.