Gift-giving gets a little smaller

Faced with tight budgets this year, many Americans put greater value on time with family.

For Kay Meyers, and evidently for millions of others, silver bells will ring out new and creative ways of holiday gifting this year, as Americans come to terms with today's tough economic times.

Take Ms. Meyers' gifting agenda: This year, the Mukilteo, Wash., resident plans to treat family members and her fiancé – 22 people all told – to a week at a resort in Copalis Beach, Wash., where she owns a time-share. In contrast, last year, she took the family group, including 16 nieces and nephews to a costlier ski trip in Idaho.

Moreover, she is asking friends to exchange with her a gift of a shared activity rather than a purchased item. And Ms. Meyers, who owns a mini-storage facility, is taking her two employees out to dinner as a holiday gift this year; in contrast, last year she treated them to a two-nights, three-days' stay at a mountain retreat in Leavenworth, Wash. The way Meyers sees it, "We don't have to spend a lot of money to enjoy ourselves. It's time we hunkered down and enjoyed things within our means."

That's a theme echoing across the United States this year. Data show that many Americans, feeling less secure in their jobs and watching their investments pummeled in value, have put their holiday shopping lists on the chopping block. While that doesn't mean coal in everyone's stockings this year, it does mean that Christmas, Hanukkah, and Kwanzaa celebrations won't be as gift-laden and expensive as in recent years.

A bevy of surveys all point to thriftiness. For instance, the National Retail Federation has forecast $470 billion in holiday sales, a 2.2 percent rise from last year and significantly lower than the average 4.4 percent holiday sales growth over the past 10 years. Moreover, the International Council of Shopping Centers predicts a 1 percent gain in US chain stores' 2008 holiday sales – the lowest percentage growth since 2002.

In addition, in its nationwide survey, business-advisory firm AlixPartners found that 64 percent of respondents plan lower outlays for gifts this season. Fully 86 percent expect to spend $1,000 or less on gifts, versus 77 percent who said they spent $1,000 or less last year, and 37 percent said they expect to spend $250 or less this year, versus 21 percent who said they did so a year ago. Such data show "a dramatic shifting in consumer gift-giving this year," says Matthew Katz, head of AlixPartners' retail performance improvement practice.

The most popular methods of cost-cutting in AlixPartners' survey: spending less on each person, waiting for sales and specials, buying less costly merchandise, giving gifts to fewer people, and cutting back on nonfamily gift-giving.

But when it comes to children, parents are hesitant to cut back.

In fact, as part of its holiday spending survey taken in September, TNS Retail Forward found that out of 13 spending choices, the category of "gifts for my children" had the highest percentage of respondents who expected to spend more for the holidays. Nonetheless, the TNS data show that, although 12 percent of respondents said they would be spending more on their children's gifts, 19 percent expect to spend less on them.

At the website Gifts.com, "we're getting more searches on gifts for kids, and they're taking place much earlier than last year," reports the site's Gift Guru, Dana Schultze. "People don't want kids to lose out on Christmas this year."

But if parents do need to pull back in that area, they should forewarn kids, some gifting pros say. "You can say things like, 'Mommy and Daddy spent too much money this year and learned a lesson, like the kind of lessons you learn in school. So we have to spend less this year in order to give gifts later on. But we want give you five special gifts. So let's figure out what your five favorite gifts are,' " says Rhonda Grote, a gifting expert at thinkthoughtful.com.

But will a frugal attitude endure after the economy brightens? Perhaps not, some observers say – at least not to the extent of the belt-tightening expected this year. Decades of seasonal advertising has conditioned Americans to spend during the holidays, they say, and people simply enjoy splurging this time of year.

But even in these leaner times, Ms. Schultze, of Gifts.com believes people can enjoy heartwarming holidays.

"Especially this year, people are looking at how to make family time more special – to spend time together, to have meals together, having their festivities at home. They're not focusing so much on gifts but on memories they can make together." All this could enhance the holidays for most people – "even if they don't fill up the living room with gifts."