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Deck the Halls: Gifts Go 'Home' for the Holidays

Lori Andrews | Flickr | Getty Images

The concept of being home for the holidays may be taking on new meaning for shoppers, who have been increasingly turning their attention to the home and shopping for more practical gifts this holiday season.

In its latest holiday forecast, International Business Machines predicts shoppers will be decking the halls this holiday season, leading to a jump of nearly 7 percent in home furnishings sales during November and December.

IBM uses analytics software to help make forecasts. The software looks at recent trends as well as 22 years of sales and economic data.

"Over the past 10 months, we've seen an estimated growth of nearly 9 percent for the home category," said Jill Puleri, global retail leader for IBM Global Business Services.

This is a trend that can help department stores such as Macy's and Nordstrom's as well as more dedicated home goods players such as Bed Bath and Beyond and Williams-Sonoma, the operator of stores such as Pottery Barn and West Elm.

Puleri attributes the boom in the category to the increase in the number of multigenerational homes brought on by the economic downturn. But earlier this year, IBM also released research that tracked a correlation between the Year of the Dragon in the Chinese lunar calendar and home furnishing booms. (Read More: Is the 'Year of Dragon' Driving a Home Furnishings Boom?)

Still, it is likely that as generations move in together, the situation triggers the need for new furniture, décor and items such as linens and pillows, as families rearrange their home to reflect the new residents.

According to a recent U.S. census report, multigenerational homes have increased by more than 1.2 million over the past few years. The Pew Research Center estimates 41 percent of adults between the ages of 25 and 29 are living, or have in recent years lived, with their parents. (Read More: Got Grandma? Multigenerational Homes on the Rise)

"The home is becoming more than a place to live, but now it's a place to gather and entertain — it's being re-established," she said.

According to Puleri, consumers are still talking about moderation in how they spend money, and that means that spending tends to shift from category to category. Earlier in the year, for example, there was a boom in men's apparel. Then, around the time the kids headed back to school, women's apparel sales ticked upward.

Now, Puleri expects spending to shift from clothing to other categories. As a result, the IBM survey calls for apparel sales to rise 2.49 percent during the holiday season, with women's clothing sales up 2.9 percent.

She also expects there to be less spending on big-ticket items such as entertainment systems and television. IBM projects consumer electronics sales to fall 2.64 percent.

The beauty category also is expected to show strong growth during the holidays, with sales up 7.83 percent. Sales in this category have been strong throughout the year, according to Puleri. For the full year, beauty products sales are expected to be up 10.84 percent.

"Beauty has had a very good run," she said, citing an aging population as one factor behind the growth.

Also, with shoppers in a more conservative mood, the focus will likely be on more practical gifts this year, Puleri said. (Read More: Survey Says...Merry Shoppers, Shallow Pockets)

"I think this is a 'needs' holiday," Puleri said. "People want to give things that are meaningful. ... People want the gift they buy to be something that really does matter."

-By Christina Cheddar Berk, CNBC.com News Editor; follow her @ccheddarberk.

Questions? Comments? Email us at consumernation@cnbc.com.

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