Shoppers Plan to Spend More on Holiday Gifts
Retailers might be looking forward to a brighter holiday season after a disappointing 2002, with studies released Tuesday showing that shoppers could spend as much as 7% more than they did last year.
The tax and consulting firm Deloitte said total holiday retail spending, through the end of December, would be up 6% to 7%.
The National Retail Federation said its survey found that the average American would buy $672 worth of gifts, up 3.5% from last season’s $649.
But they will be looking harder for bargains, the NRF said: Almost two-thirds of the 8,200 people it questioned selected discounted or “everyday low” prices as the main motivator that would make them open their wallets, compared with 55% last year.
The message for stores: Put it on sale.
“If you don’t mark down merchandise, you’re going to have it in January,” NRF spokeswoman Ellen Tolley said.
In fact, 75% of those in the NRF poll said they would shop at discount outlets this year, almost the same as last year.
About four in 10 people said they have already started their Christmas shopping or were planning to this month.
Retailers are likely to accommodate them by marking down merchandise earlier than usual, Tolley said.
“I wouldn’t be surprised to see the promotions start right after Halloween,” she said.
Deloitte, which polled 17,000 people, found that 67% of shoppers would spend the same amount as last year or more, up from 64% in 2002 and 66% in 2001.
The firm also said Southern Californians were more likely than the average American to pick up presents at warehouse stores such as Costco and Sam’s Club.
Even so, people in the region “are optimistic about their holiday shopping plans, due to reduced global concerns, extra cash from refinancings and tax refunds and pent-up spending desires,” said Jackie Fernandez, a partner in Deloitte’s Los Angeles consumer business group.
This year, shoppers nationwide have some extra cash to fork over, noted Sung Won Sohn, chief economist for Wells Fargo. They have collected about $65 billion from federal tax cuts and an estimated $100 billion-plus from mortgage refinancings.
“Real buying power is going up very rapidly,” he said, which should fuel holiday spending. “We estimate that as much as 40% of retail sales, excluding autos, will come during the holiday shopping season.”
Sohn said his upbeat estimates were based on his projection that 100,000 to 150,000 jobs would be added in both November and December. He expects such job growth to continue into next year.
“That will be the final confirmation that self-sustaining economic growth is here to stay,” he said. “If we do not get that job gain, then I think all bets are off.”Last week, the market research firm NPD Group released a survey less cheerful than the studies from Deloitte and the NRF.
NPD Group said 68% of the people it questioned planned to spend only about as much as they did last holiday season.
Retail experts and economists said it wouldn’t be hard to gain on last year, when holiday sales were so weak. In 2002, when there were six fewer shopping days between Thanksgiving and Christmas compared with the previous year, holiday sales edged up 2.2%, according to NRF, which represents 100 retail trade groups. This year, Thanksgiving falls on Nov. 27, giving shoppers one more day than last year to hit the stores.
“We just need to hold our own for the rest of the year and it’s going to look like a good Christmas” compared with last year, said Scott Hoyt, an economist with Economy.com.
Newport Beach resident Jami Paley, a stay-at-home mom, said she and her husband were pulling back on their spending now, after buying new furniture and remodeling their condominium this year, buoyed by the success of her husband’s business. She said she would bypass shopping Nordstrom, for example, and go to Ross and TJ Maxx instead.
But retail experts said higher-end stores could finish strongly this year, largely because of the stock market turnaround.
“I think the high end is going to lead the way, led by retailers like Neiman Marcus and Nordstrom,” said Robert Buchanan, an analyst with A.G. Edwards & Sons. “A lot of the tax relief is focused on the middle to upper income, and the stock market is just acting great these days.”
Tolley at the NRF said although no “must-have” item has emerged, shoppers would be smart to buy what they want early, because retailers are maintaining lean inventories so they won’t have an abundance of goods to unload after the holidays.
“The promotions may get better,” she said, “but the selection won’t.”
