Indicators Point to Lucrative Holiday Shopping Season

A survey released Tuesday shows consumers expect to increase Christmas spending by 12% over 1995, raising the prospects for a good holiday shopping season.

Holiday shoppers plan to spend an average of $764 on gifts, up from $695 in 1995, according to a survey by Deloitte & Touche and the National Retail Federation. It would be the biggest spending increase in four years.

Analysts said the spending plans show that consumers overall are encouraged by the economy, despite high levels of household debt. In California and the West, where the economic recovery is not as long-lived as in the rest of the country, consumers expect to spend $732 on holiday gifts, slightly less than the national average.

Analysts expected the consumer optimism to translate into improved holiday sales. Retail sales are expected to increase by 4% to 5% over the 1995 shopping season--one of the weakest seasons in recent memory. Retail sales in California, which have lagged the nation in recent years, should come in around the national average, analysts said.

“The picture is the same in Orange County as it is in Los Angeles and the rest of California,” said Dave Chalich, an audit manager with Deloitte & Touche in Costa Mesa. “And it’s not surprising given the high employment levels.”

“The holiday mood is positive,” said Irwin Cohen, a partner with Deloitte & Touche in New York.

That assessment was reiterated in another survey Tuesday. The Conference Board said that, although consumer confidence dipped in October, it remains well ahead of last year, signaling a strong holiday shopping season ahead.

“Prospects remain bright,” said Lynn Franco, associate director of the Conference Board’s consumer research center.

The board’s consumer confidence index dipped to 106.2 in October, down from 111.8 in September, but still 10 points ahead of last October. In California, the index fell to 96.4 in October from 106.4 in September, but still 20 points ahead of October 1995.

Analysts expect apparel sales to lead holiday spending increases, in part because consumers have postponed clothing purchases for several years.

Holiday spending is important to retailers because it accounts for as much as 30% of sales.

Analysts said that one challenge of the season is that it is short, with five fewer shopping days between Thanksgiving and Christmas. Retailers will be offering discounts early to draw consumers into stores before Thanksgiving, analysts said.

“I think the result is that it will look like a promotional Christmas, but the promotions have been planned,” said Walter F. Loeb, a retail analyst in New York. “They won’t be eroding profits.”