Consumers more optimistic about holiday spending

Written by Dave Gallagher | The Bellingham Herald | October 30, 2009

Well, I’m finally caught up enough to get back to blog posting.

This week I’ve been seeing plenty of surveys about the holiday shopping season. Below are a few graphs from a press release about Deloitte’s holiday survey. I’ll soon start checking around locally to see what the expectation in Whatcom County, so if you’re a retailer who has noticed some trends heading into the season, let me know.

NEW YORK, October 28, 2009 — After one of the most difficult years on record for retailers and consumers, Americans are more optimistic as the holiday shopping season kicks off, according to Deloitte’s 24th Annual Holiday Survey of retail spending and trends.

Fears about the recession are slowly subsiding, with more than half of those surveyed (54 percent) saying they expect the economy will improve in 2010, compared with 28 percent responding favorably last year. The optimism is also starting to show in Americans’ shopping plans. More than half of consumers (51 percent) hope to spend more or the same on the holidays, an improvement from last year’s 41 percent response.

Despite expectations for economic improvement, consumers continue to reduce their spending on gifts. The average number of gifts people plan to purchase declined to 18.2  from 21.5 last year and 23.1 in 2007. The amount consumers plan to spend on gifts is down as well, to $452 compared with $532 in 2008, and $569 in 2007.

Consumers, however, do appear willing to increase their spending on the non-gift items that traditionally account for a smaller portion of the holiday budget. These categories include socializing away from home, entertaining, non-gift clothing and home/holiday furnishings. These increases lift consumers’ total anticipated holiday spend to $1,145, which is a 16 percent increase over last year.

Caution still reigns when it comes to purchasing behavior, as two-thirds (66 percent) of consumers plan to shop differently due to concerns about the economy. These shoppers demonstrated a focus on frugality in their intentions to buy items on sale (74 percent), buy lower-priced items (57 percent) and use more store coupons (54 percent).

Among consumers planning to spend less, worries over job loss and pay reduction rose sharply, doubling to 35 percent this year (from 17 percent in 2008). Concerns about higher food and energy prices, stock market volatility, and an overall concern about the economy have shifted downward, averaging a 21 percentage point drop from 2008.

“Consumers appear to be revisiting shopping categories that they had put on the back burner for a while, and they may be returning because of the need to replenish,” said Stacy Janiak, vice chairman and Deloitte’s U.S. Retail leader. “Over the past several months, we have seen key economic indicators ease from their worst levels, helping to put more resources back into Americans’ pockets. As a result, a cautious upturn in sentiment may draw consumers out of their bunkers, turn their focus away from saving and debt reduction, and encourage them to do some holiday shopping for their homes, family and friends.”