Planned Holiday Spending Down 5%

Planned holiday spending for 2008 is, on average, $775 - down 5% from last year, according to a Brand Keys, Inc. national survey of 16,000 consumers in the nine US Census regions, reports Retailer Daily.

“Given that there isn’t any increase in anticipated spending this year, you’ll see retailers competing for fewer consumer dollars,” noted Brand Keys President, Robert Passikoff.

“There are always lower product prices around this time of year, but retailers are going to plan promotions very carefully. It’s going to be a very carefully orchestrated competitive retail environment this year.”

Below, more findings from the Brand Keys survey.

Will they spend more or less?

The number of consumers who say they would spend less this holiday season increased, as did the number of consumers saying they would spend the same. Those saying they’d increase spend decreased significantly.

Where will they spend?

Loyalty to specific retail channels is again in question as consumers say they would use the full range of retail formats and channels.

“More shoppers, with thinner wallets and seeking to avoid the crowds, lines at check-out, and the stress associated with bricks-and-mortar shopping, say they’ll go online to shop this holiday season,” noted Passikoff.  Consumers will also be looking for retailers where there is a higher level of customer service, as attributes like that seem to pump up the price-value equation, according to Brand Keys. As a result, department stores are going to benefit most and will most probably look to encourage multiple visits by customers, Passikoff noted.

“Location and value are still the key engagement and loyalty drivers for the retail category. But even with tighter budgets, merchandise range, store reputation, and especially the shopping experience all play a role in engendering loyalty, sales, and profits,” said Passikoff.

What will they buy?

Gift cards are the most popular holiday purchases this year:

• Gift Cards: 80%
• Clothing & Accessories: 50%
• Electronics/Computers/Phones: 49%
• CDs/DVDs/Video Games: 48%
• Books: 25%
• Home Décor: 15%
• Travel: 1%

“Just what might be expected, and similar to last years’ declared purchases. There’s been a decrease in the electronics- technology category, down 13% from last year, but gift cards are up 15% from 2007,” noted Passikoff.

“Consumers are anticipating discounts in the electronics-technology area, as those kinds of offers tend to generate store traffic. Gift cards have become a very safe and very acceptable holiday staple.”

Most are shopping early

Nearly two-thirds of the consumers surveyed (60%) say they have already begun their holiday shopping earlier this years, with most indicating they’ve been looking for gifts (and sales) well before the traditional post-Thanksgiving “Black Friday.”

Comments

[User 283977:]

My wife and I went out holiday shopping today. We were struck by the lack of attractive merchandise on the shelves. Based on the unusual selection of colours, I got the impression that a significant amount of the merchandise on display was made up of old back stock that did not sell during the last holiday season.

This raises the possibility that merchants are hedging their bets by ordering less new stock to reduce the possibility of getting stuck with it if it does not sell. Of course, merchandise that did not sell last year will not likely sell this year either. If this is what some of the retail establishments are doing, it will probably amplify the effects of the current economic contraction on same store retail sales. Reducing risk by minimizing inventories and limiting orders on fresh stock increases the risk that you won't have anything that consumers want to buy. Kind of a self fulfilling prophecy kind of situation.

2008 Nov 11 06:17 PM