Contents:

Chapter 1: Gifting Market Study- Who was studied: Methodology & Research Summary Overview : Consumer research that focuses on gifting (eg “verb”), not the gift (eg “noun”) Research Objectives Research Methodology -Phase 1: Qualitative Focus Groups -Phase 2: Quantitative Online Survey Research Survey Questionnaire Chapter 2: About the Gifting Market: Majority of Americans spend over $250 buying gifts 16 Overview of Gift Giving Market • Figure 2-1: Annual expenditures on gifts, 2002 Majority of Gift Givers Spend More than $250 Buying Gifts • Figure 2-2: Serious vs casual gifters defined by total spending Baby Boomers and the Affluent Spend the Most on Gifts • Figure 2-3: Total spending on gifts by demographics Women Are Primary Household Gift Buyer Chapter 3: About Gift Giving Holidays & Occasions: Christmas and birthdays are the primary gifting holiday and occasion throughout the year Gifting Budget Nearly Evenly Divided Between Holiday Gifts and Gifts for Specific Occasions • Figure 3-1: Total gifting budget by holiday and occasion Holiday Gifting Overview Christmas/Hanukkah Is Top Gifting Holiday Mother’s Day Is Second Most Important Gifting Holiday Valentine’s Day Is Third Most Important Gifting Holiday Father’s Day Gifting Overview Easter/Passover Gifting Overview Halloween Gifting Overvew Thanksgiving Gifting Overview • Figure 3-2: Holiday Gifting summary, percentage that give gifts for the holiday; average spending; % share of gifting budget; number of people on gift list; average spending per person Occasion Gifting Overview Birthdays Are the Top Gifting Occasion and Account for Second Largest Share of Budget Nearly Half of Gifters Give Anniversary Gifts Friendship, Thank You and Just Because Gifts Are Important Reason for Gifting Weddings Are the Fourth Most Popular Gifting Occasion New Baby Gifting Overview Romance Is Top Spending Occasion Graduation Gifting Overview Work-related Events Gifting Overview Hostess/Housewarming Gifting Overview School Events/Teachers Gifts Religious Events Other occasions Figure 3-3: Occasion Gifting Summary, percentage that give gifts for occasion; % share of budget; number of people on gift list; average spending per person Chapter 4: About Trends in Gift Giving: Connecting replaces cocooning as dominante consumer trend That means more gifting Shoppers Say They Will Spend About the Same on Christmas 2003 as Last Year • Figure 4-1: Planned spending Christmas 2003 Gift Marketing Strategy  Get More People to Buy More Gifts for More People More Often for More Money • Figure 4-2: Trends in gifting Gifting Is Rare Opportunity for Exponential Marketing Gift Shoppers Also Buy Themselves Gifts • Figure 4-3: How frequently gifter purchases self-gift About Gift Shopping Experiences Last Time Went Shopping for a Gift • Figure 4-4: About the last gift shopping experience Chapter 5: About Selecting the Perfect Gift: Research reveals attributes of a good gift The Perfect Gift Is Something That the Recipient Will Like but Is Unlikely to Buy for His or Her Self Comments on what makes a good gift Emotional Values, followed by Product Quality, Are Top Gift Attributes • Figure 5-1: Gift attributes rated very important Gifters’ Satisfaction Tied to How Well They Know the Recipient’s Taste 3 Very Special Gifts Dissatisfactions Gifts on sale Last minute gift selection Personalized gifts Gifts that target a special interest Gift selection for someone not well known Feels insulted when a gift is returned Selects stores for easy return Opportunistic gift purchase Practical gifts About Setting the Budget For A Gift Greeting Cards Most Often Bought to Accompany Gift Many Serious Gift Givers Buy and Stash Gifts Many Serious Gift Givers Also Like to Get Gifts Obligation or discomfort in receiving: Too personal, prefer to give and receive practical gifts Chapter 6: About Selecting the Particular Gift Item: Research reveals shoppers' preferences for specific gift items Gifting Occasion Important in Selecting Gift Entertainment & Recreation Gifts Are Gifter’s Favorite Choice • Figure 6-1: Categories of gift items purchased, average spending Gift Certificates Favored by Younger Consumers, while Older Consumers Prefer to Give Cash Gifting Decision Tree  How the Gift Is Selected Top Gift Choices Are Flowers, Candles and Jewelry & Watches • Figure 6-2: Popular gift choices Discussion of Popular Gift Product Choices Baskets, Boxes and Tins: Candles, Aromatherapy, Scented Gifts: Collectibles: Dinnerware, China, Tabletop: Figurines: Flowers, Plants, Garden Decorations: Kitchenware & Housewares: Licensed merchandise: Personal Care: Personalized Merchandise: Pet Gifts: Photography Gifts, including Picture Frames Seasonal Decorations, including Christmas ornaments and lighted villages: Toys, Games, Dolls: Vases, Urns and Pots: Wine Accessories, Barware, Beer Accessories: Chapter 7: About Selecting a Store to Shop for Gifts: Gifters want a good price when choosing a store to shop for gifts Store Selection Hinges on Price • Figure 7-1: Store attributes rated very important Internet Delivers a Shopping Experience Some Gifters Crave Discount Department Stores Followed by Traditional Department Stores Are Favored for Gift shopping • Figure 7-2: Where gifters shop for gifts Store Brands and Product Brands Interact in Gifting Gift Shoppers Are Ambivalent about Gift Registries Gift registries make gifting easier for some: Others view gift registries/wish lists for everything but weddings as improper, even offensive Check gift registry, but shop somewhere else Stores Should Make Gift Shopping Easier Complimentary gift-wrap Better in store service Gift Stores Don’t Connect with the Gifting Consumer Place to find items not available elsewhere Place to buy greeting cards: Place to shop while traveling, but not at home: Too expensive: Don't carry the kind of gifts they like to give: Place to browse, not to buy: Not convenient: Chapter 8: About the Different Types of Gifting Shoppers: Psychographic segments. Different types of gifting consumers and their distinctive motivations in gifting Three Types of Gift Buyers • Figure 8-1: Attitude statements about gifting Three Types of Gifters Distinguished By Attitudes About Gift Giving • Figure 8-2: Three different gifting segments and their attitudes about gifting Gift Challenged Charlie Needs Gifting Help Gift Challenged Charlie Demographic Distinctives How Much Gift-Challenged Charlie Spends on Gifts Gift-Challenged Charlie’s Trends in Gifting • Figure 8-3: Gift-challenged Charlie's trends in gifting Emotional Ethel Loves Gifting Emotional Ethel Demographic Distinctives How Much Emotional Ethel Spends on Gifts Emotional Ethel’s Trends in Gifting • Figure 8-4: Emotional Ethel's trends in gifting Practical Patty Plans for Gift Shopping Practical Patty Demographic Distinctives How Much Practical Patty Spends on Gifts Practical Patty’s Trends in Gifting  Figure 8-5: Practical Patty's trends in gifting • Figure 8-6: Gifting segment spending summary Chapter 9: About Maximizing Sales to the Gifting Market. Executive summary of major Findings of the Research and Their Strategic Implications Gifting Is ‘Exponential’ Marketing Opportunity Retailers and Marketers Must Develop Strategies to Enhance the Gifting Experience, rather than Focus on the Gift Majority of Adults Are ‘Serious’ Gifters Baby Boomers and the Affluent Represent Best Target Market for Gifting • Figure 9-1: Total spending on gifts by demographics Women Are the Family’s Primary Gift Buyer Gift Buying Extends Throughout the Year, Not JUST the Last Two Months • Figure 9-2: Holiday and occasion gifting spending summary Gifting To Become More Important as Connecting Replaces Cocooning • Figure 9-3: Trends in gifting spending Gift Marketing Strategy  Get More People to Buy More Gifts for More People More Often for More Money Self-Gifting Gives Retailers and Marketers an Additional Sales Opportunity The Perfect Gift Is Something That the Recipient Will Like but Is Unlikely to Buy for His or Her Self Emotional Values, followed by Product Quality, Are Top Gift Attributes Greeting Cards Most Often Bought to Accompany Gift Many Serious Gift Givers Buy and Stash Gifts Gifting Occasion Important in Selecting Gift Entertainment & Recreation Gifts Are Gifter’s Favorite Choice • Figure 9-4: Categories of gift items purchased Gift Certificates Favored by Younger Consumers, while Older Consumers Prefer to Give Cash Gifting Decision Tree - How the Gift Is Selected Store Selection Hinges on Price • Figure 9-5: Store attributes rated very important Internet Delivers a Shopping Experience Some Gifters Crave Discount Department Stores Followed by Traditional Department Stores Are Favored for Gift Shopping • Figure 9-6: Where gifters shop for gifts Gifting Represents Significant Opportunity for Traditional Department Stores Store Brands and Product Brands Interact in Gifting Traditional Specialty Gift Stores Don’t Connect with the Gifting Consumer Three Types of Gifters Distinguished By Attitudes About Gift Giving

Methodology

The purpose of the research study is to investigate the following: -Gifting behavior by holiday and occasion: To conduct a national survey to discover key characteristics of the gifting market, such as what holidays and occasions consumers buy gifts; how many people they buy gifts for and how much they spend. What range of products they chose for gifts, what drives their selection of particular gifts, and what drives their selection of stores to shop for gifts. -Demographics of the gifting market: How many households buy gifts, what types of gifts do they buy, how much do they spend, where do they shop for gifts, demographic segments within the gifts market? -Gifts market buying behavior: What are the primary characteristics of the consumers’ buying behavior related to different gifts. What makes a good gift? What attributes and qualities make gifters want to buy? Where do they shop for these items; how do they decide to purchase one items over another; role of brand in gifting buying behavior; purchase incidence and spending on key categories of gifts. -Psychographic profile and segmentation of the gifting market: The psychographic profile of gift consumers will reveal their different drives and motivations in purchasing gifts; what factors are more or less important in driving gift purchasing decisions; how can gifts marketers and retailers better understand the hearts and minds of their consumers and use that insight to capture a greater share of the consumers’ gifting budget. In essence we will discover “why people buy gifts.” -Product specific research: Because there is an industry that classifies itself as the ‘gifts industry,’ specific research about consumers’ purchases of 15 major gift categories, such as candles, baskets, boxes and tins, personalized gifts, licensed merchandise, tabletop and dinnerware and collectibles and figurines to name a few, are also researched. Research Methodology Our research methodology for this gifting report entails two different types of research with different methodologies. First is a qualitative research phase, conducted using focus groups, that is used to develop hypotheses and concepts about the gifts market. These hypotheses are then tested and validated in the second phase of the research project encompassing quantitative research. Phase 1: Qualitative Focus Groups A total of 4 focus groups were conducted. Respondents were recruited based upon high involvement with gift giving and recent purchase history buying products in the major giftware product categories (description of respondents follows). Two groups were held July 15, 2003 in Columbus, OH (one group women only and the other a mixed group). Two groups were also held August 21 in Orange County/Los Angeles area (both groups mixed gender). Respondents were recruited based upon heavy and active gift buying experience in the recent past, as well as recent purchase history of giftware products. Among the focus group respondents, their total gift spending since January 2003 averaged $776 (Note: one respondent bought a $20k car as graduation gift. That outlier amount is excluded from these averages). According to their screeners, the respondents were most active since January buying birthday gifts (97 percent); Mother's Day (94 percent); Valentine's gifts (91 percent); Father's Day (80 percent); wedding gifts (77 percent); graduation gifts (67 percent); Easter/Passover (67 percent); other gift occasions (65 percent); hostest/housewarming gifts (34 percent). Among the four focus groups, a total of 35 consumers were interviewed (18 in Columbus and 17 in LA/Orange County). The respondents were mixed gender, roughly 70 percent female and 30 percent male. The most widely represented age distribution was 45-to-54 years (37 percent), with the next age group 35-to-44 years (34 percent). About 17 percent were 55-to- 64 years and 11 percent were 25-to 34 years, with no one under 25 years of age included in the groups. All respondents had household income in excess of $50,000. Coinciding with their high income level, the focus group respondents were highly educated with about 70 percent being college grads or more. In addition to active gift buying, the respondents were recruited for the purchase of specific giftware products as gifts since January. More than 50 percent of the respondents reported purchasing the following as gifts: Personal care gifts; novelties and souvenirs; kitchen accents; candles and candle accessories; garden and outdoor decorative accents; frames; stuffed animals, dolls or other collectible-type toys; holiday decorations; and tableware gifts or accessories. A final criteria in the screening was to identify people that were passionate about gift giving. The following percentage of focus group respondents strongly agreed to each of these attitudinal statements: When shopping for a gift, I spend lots of time thinking about picking the right gift for the recipient — 83 percent I enjoy shopping for gifts — 60 percent I spend more money buying gifts for my friends and family than other people do — 51 percent I am more involved in gift giving that are most of the other people I know — 37 percent (additional 26 percent agreed with statement) Phase 2: Quantitative Online Survey Research Based upon the findings from the qualitative focus groups, an in-depth survey questionnaire was developed to provide the projectable, quantitative research. Survey instrument used follows. The survey was conducted online using a highly reliable internet survey polling firm that conducts research for American Demographics, among others. Rather than being a representative survey of all gift givers, this survey consisted of a sample of 950 “heavy” gift givers, i.e. shoppers who spent $250 or more buying gifts in past year. Because the goal of this research was to help marketers and retailers increase their understanding and sales potential among the gifting market, this research focused on those individuals that are prime targets for gift marketers and retailers efforts: the ‘serious’ gifter. The survey sample was comprised of 475 men and 475 women and was fielded between October 20-28, 2003. This research study was sponsored in part by the gift industry’s most forward-thinking companies, including Department 56, Glass Baron, Lenox, Longaberger, and Walt Disney,among others.