The National Retail Federation said that financial pressures and a lack of confidence in the U.S. economy will result in a lower 2.2 percent increase in sales this holiday season. This is well below the 4.4 percent ten-year average.
The recent events on Wall Street, and its heavy media coverage, have formed a strong sense of destabilization among many consumers, despite a 3.3 percent growth in GDP in the second quarter. According to IDEX Online analyst Ken Gassman, contrary to that feeling, other economic indicators such as a low unemployment rate and rising prices of new homes, still point to a healthy economy. Consumers, therefore, should have a stable discretionary budget.
The NRF forecasts the November-December sales to total $470.4 billion. These sales include most traditional retail categories such as discounters, department stores, grocery stores and specialty stores, and exclude sales at automotive dealers, gas stations and restaurants.
“We expect consumers to be frugal this season and less willing to splurge on discretionary items,” said NRF Chief Economist Rosalind Wells.
The retail trade association said a struggling housing market and rising unemployment accompanied by meager income gains will continue to hamper the consumer throughout the season. The NRF does not foresee an economic turnaround until the second half of next year.
Consumers in the United States have already changed how they shop due to the recession - this was evident in very poor retail sales during Christmas season 2007, diamonds.net says.
Iconoculture, a shopping trends research company, expects this Christmas season 2008 will experience tighter wallets, and that consumers will seek every way possible to save money.
Some of the trends identified by Iconoculture for Christmas season 2008 include:
“Practical gifting.” This is the leading motivator for buyers. While consumers plan on purchasing gifts as always, they will hold out for steep discounts.
“Christmas, Part II.” In the opinion of Iconoculture, that could be an added benefit to retailers given that airfares and travel have become so expensive. Consumers may opt to stay home this year, and thus buy gifts for loved ones during the post-Christmas sales.
“Cards That Keep on Giving.” These will continue to be hot, but there will be changes this year. Squeezed budgets will force more Americans to opt for lower card values.
“One for You, One for Me.” This one is a new holiday shopping motto. Don’t expect consumers to deny themselves completely. Those savvy, but weary shoppers who pinched pennies and hoarded dollars all year are expected to think about a little indulgence this Christmas.
Even the wealthiest Americans start watching their pennies, with jewelry spending one of the top casualties of the crisis, National Jeweler writes.
This, and other spending trends among America’s upper class, were revealed at a press conference held in New York City unveiling the results of the “Annual Survey of Affluence and Wealth” in the United States conducted by American Express Publishing and the Harrison Group.
The survey delved into the spending habits and attitudes of Americans who represent the top 10 percent of the economy, with at least $100,000 per year in discretionary income.
The survey results show that 75 percent of respondents believe the country is in a recession, and that their outlook for the future has dimmed in recent months.
When asked in September 2008 if they felt “extremely or very optimistic” about their own futures, 55 percent were negative; in December 2007, 70 percent remained hopeful.
”We are very disturbed about the decline in optimism,” said Harrison Group Vice Chairman Dr. Jim Taylor, who presented the study results alongside Cara David, senior vice president for American Express Publishing.
Amid the economic gloom, the wealthy, like those in other income brackets, are now starting to pull back on their spending, with the jewelry market definitely feeling the pinch.
While some categories of spending among the wealthy remain safe, - such as hybrid automobiles and children’s clothing, - other areas where the wealthy plan to pull back on spending are classified as “challenged.”
Topping this category is jewelry, which ranks alongside gas-guzzling SUVs as the most challenged market.
The survey also took a look at wealthy Americans’ plans for Christmas holiday spending. It was revealed that overall the affluent will spend 6 percent less on holiday gifts this year than they did last year.
Topping the wish list of wealthy Americans this Christmas are gift certificates to a particular retailer (32 percent), followed by a book or video (27 percent) and electronics entertainment equipment (25 percent.)
Coming in last on the wish list is fine jewelry, with only 14 percent of wealthy Americans wanting it.
Looking more closely at jewelry as a category, the study shows that only 4 percent of wealthy respondents plan to increase their spending on jewelry, while 27 percent plan to decrease spending. Of that 27 percent, the average cut is 59 percent.
A recent survey released by Nielsen confirms this trend taken as a whole.
The survey showed that irrespective of their income more than one third of American consumers plan to curtail their Christmas spending because of the economic downturn.
The panel survey of 21,000 households made it evident that 35 percent of respondents intended to cut their Christmas expenses, while 50 percent planned to spend as much as one year ago, with only 6 percent eager to exceed that level.
Among the most affluent Americans (earning over $100,000 per year) 32 percent are bound to spend less and merely 5 percent intent on greater spending.
To survive the tough Christmas season Nielsen is advising retailers
- to manage inventory like never before;
- reach out to the best customers by e-mail or sending them personal advertising offerings;
- to take into account that this Christmas strong sales will be driven by necessity goods;
- to leverage CPG categories to drive basic gifts and stocking stuffers.
