Experian sees consumers still wary for holidays

NEW YORK (Reuters) - U.S. consumers will still use extreme caution when choosing their gifts during the holiday season this year, and companies will need to find better ways to convince them to purchase, a marketing expert said.

"From a spend perspective, the spend is still down," said Regina Gray, vice president of strategic insights at credit information firm Experian (EXPN.L) told the Reuters Consumer and Retail Summit in New York.

"Consumers are still going to be very conservative this year," she said. "While confidence is increasing that doesn't mean that spend will increase."

As an example, Gray said U.S. online spending was down 19 percent year over year for the first three weeks in June.

"If that's the case ... we have to be even more careful about understanding what the consumers are going to react to," she said.

That means that clever retailers must use marketing techniques that reach out more directly to individual consumers based on their interests, whether through social networks or targeted e-mails.

"Consumers are demanding that you listen to them and you engage them in ways that are relevant and where they can dictate the terms of that engagement," said Gray.

Social networking, using sites such as Facebook to engage consumers with a brand, is quickly catching up to email marketing as the second most effective retail traffic driver, according to Experian's second annual holiday marketer report.

While social networking currently makes up 7.6 percent of the total source of traffic to retail sites -- compared with 8.5 percent for e-mail marketing -- search still represents the most significant chunk, at 34 percent.

To make targeted messages most effective, the savviest retailers should ask their shoppers through which channels they prefer to receive information, said Gray, adding that those subsequent messages must not disappoint.

"If they (consumers) find value in providing their information, they'll be more willing to provide it," said Gray. "When they see it as they're being bombarded with unnecessary and irrelevant messages, then they'll start to unsubscribe."

(Reporting by Alexandria Sage, editing by Dave Zimmerman)