Report: Consumers in a frugal holiday mood

U.S. households are expected to spend an average of $390 on Christmas gifts this holiday season, down from last year's estimate of $418, The Conference Board reports today.

The survey of Christmas gift-spending expectations covers a representative sample of 5,000 U.S. households. It was conducted for The Conference Board in November by TNS.

"Consumers are approaching the holiday season very cautiously," said Lynn Franco, director of The Conference Board Consumer Research Center. "Job losses and uncertainty about the future are making for a very frugal shopper. Retailers will need to be quite creative to entice consumers to spend, both in stores and online this holiday season as consumers most certainly will expect major markdowns and bargains."

The top spenders will be New England households (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont), which  intend to spend an average of $534. Lowest Christmas spending will be in the Mountain region (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming), where consumers intend to spend $332 on Christmas gifts.

Only 26 percent of all households intend to spend $500 or more on Christmas gifts, down slightly from 27 percent last year. Among other households, 35 percent plan to spend $200-$500, down from 37 percent last year, and 39 percent are planning to spend less than $200, up from 35 percent in 2008.

Consumers also will approach online holiday shopping very cautiously, holding off on big ticket items and holding out for major incentives like free shipping and discounts, according to The Consumer Internet Barometer, a separate survey produced quarterly by The Conference Board and TNS. The Consumer Internet Barometer surveys 10,000 households across the country and tracks who's doing what on the Internet.

"Even as the economy is starting to show signs of improvement, consumers are taking a cautious approach to their purchase decisions, focusing on lower ticket items that clearly communicate value," said Bridget Armstrong, head of Consumer Sector at TNS.

Budget-friendly items appear at the top of consumers' online holiday shopping lists. The top categories include books, apparel/footwear, toys/games and movies/DVDs. The most preferred shopping sites are those operated by online retailers such as Amazon.com. Retail stores and catalog operators such as Walmart.com or BestBuy.com are a close second.

About 90 percent of online consumers cite free shipping as a major incentive. More than two out of three said special deals and offers not available in stores, as well as coupons and discounts, would encourage them to spend more.