Washington–It appears that the proposed bipartisan settlement the U.S. Congress is considering today to avoid default will be welcome relief to the nation’s retailers—not to mention U.S. citizens, stock markets, and other nations of the world.
In its annual holiday consumer spending survey conducted by Prosper Insights & Analytics, the National Retail Federation (NRF) reported today that consumers’ concerns over the state of the economy could affect their holiday spending.
When asked how the political gridlock over the U.S. government shutdown and raising the debt ceiling might affect their holiday spending plans, about 29% of respondents said “the situation would somewhat or very likely affect their spending plans.”
Wait-and-See Attitude on Congress’ Actions
Furthermore, nearly one-third (32.7%) of those between the ages of 55 and 64 said political gridlock in Washington was somewhat or very likely to affect their spending, the highest percent among all age groups surveyed.
When asked specifically about the overall state of the economy and how it would affect their spending plans, more than half (51%) of consumers said the economy would in some way impact how they spend. Specifically, 79.5% plan to spend less overall, looking to cut corners and tighten budgets where they can.
Overall, the NRF survey found consumers plan to spend 2% less on holiday shopping this year, an average of $737.94 compared with the $752.24 they actually spent last year.*
(NRF is forecasting holiday sales will increase 3.9% to $602.1 billion.**)
“Though the foundation for solid holiday season growth exists, Americans are questioning the stability of our economy, our government and their own finances,” said Matthew Shay, NRF’s president/ceo. “We expect consumers to set a modest budget for gifts and other holiday related purchases as they wait and see what will become of the U.S. economy in the coming months.”
Last week, the NRF, the largest retail trade organization, along with the U.S. Chamber of Commerce, fired off letters to Congress urging immediate solutions to the deadlock. The fear among retailers is that less confident shoppers will be more price-conscious than usual, leading to an increase in comparison shopping and a decline in overall retail revenue. And the fact that this crisis comes so close to the kick off of the holiday season is even more cause for worry.
“A band-aid approach is not the answer,” said Shay. “Americans deserve to feel good about spending their hard-earned money on gifts for others, and this holiday season it’s evident some could second-guess their spending.”
Concerns about the economy, some of which preceded the gridlock, may have far reaching affects on holiday shoppers, the NRF survey found.
For example, consumers say they will cut back on “self-gifting,” or treating themselves to something because the deals are too good to pass up. When asked if they plan to take advantage of sales or price discounts during the holiday season to make additional non-gift purchases, 57% said yes, down from 59% last year. Self-gifters will spend an average of $129.62 this year, down from a survey high of $140.43 last year and $137.17 in 2011.
Shopping Early to Spread Out Budgets, Avoid Crowds
According to the survey, the biggest portion of shoppers’ budgets will go toward gifts for family members, with the average person planning to spend $415.50 on mom, dad, and other loved ones, down slightly from the actual $423.36 they spent last year.
“Consumers have had years of practice when it comes to managing tight budgets while still spending on items they need to, whether it be gifts or groceries for the family,” said Pam Goodfellow, director at Prosper Insights Consumer Insights. “Retailers can expect to see practical and refined attitudes from their customers this holiday season as families make thoughtful decisions about what they need to buy and what they can pass on.”
Consistent with results seen the past 11 years, four in 10 (41.2%) Americans say they will begin holiday shopping before Halloween. Specifically, 12.4% say they started before September, 8.2% began in September, and 20.6% will begin in October. More than one-third (38.8%) will begin in November and 16% plan to start shopping in the first two weeks of December. Almost four percent (3.9%) will wait until last minute and shop in the last two weeks of December.
35% to Shop Clothing, Accessories Stores
For the first time NRF asked shoppers why they shop early for holiday items. Of those who shop prior to or in September and October, six in 10 (60.3%) do so to spread out their gift shopping budget. Another four in 10 (41.9%) said the prices and promotions are too good to pass up. Additionally, 46.5% shop early to avoid the crowds associated with November and December shopping, and 44.2% do so to avoid the stress of last-minute shopping.
When looking for gifts, consumers said they will shop discounters (64.7%), department stores (56.3%), and grocery stores (51.1%). More than half (51.5%) will shop online and 35.1% will shop at clothing or accessories stores.
Whether to comparison shop or look for deals on their mobile device while out and about, the Internet will play a crucial role for retailers and shoppers this year. The average person will complete about 39.5% of their shopping on retail and other company websites, up from 38.8% last year and the highest amount in the survey’s history. (Shop.org, NRF’s digital division, is forecasting online holiday sales will grow between 13% and 15%.***)
Smartphones, Tablets to Aid in Holiday Purchases
As retailers improve their mobile websites and company apps, more people are drawn to the convenience of shopping using their mobile and tablet devices. According to the survey, more than half (56.3%) of holiday shoppers say they own a smartphone, and more than one-third (34.0%) own a tablet–both significantly higher than this time last year. Of those who own a smartphone, 53.8% will use their device to look up store hours, compare prices and purchase products; six in 10 (63.2%) tablet owners will use their device to shop, compare prices and look up product information.
Gift Cards: No. 1 on Wish Lists
When it comes to holiday wish lists, gift cards take the prize once again as the most requested gift item for the seventh year in a row. According to the survey, six in 10 (59.4%) Americans say they’d most like to receive gift cards. After a few years on the backburner, clothing and clothing accessories will fill holiday celebrants’ wish lists with more than half (51.2%) requesting these items, up from 49.1% last year and the highest amount seen since 2006. One quarter (24.3%) said they wanted jewelry.
Sales and Discounts Drive Shopping Decisions
Holiday shoppers fine tune their skills each holiday season in order to maneuver the stores, discover the best free-shipping deals and perfect their hassle-free shopping experience. When it comes to decisions like where to shop, price and promotions are top-of-mind. According to the survey, 35.6% said the most important factor in deciding where to shop are offers for sales and discounts, along with 16.4% who say the most important factor is selection of merchandise and 13.6% who say it is the quality of merchandise. Three percent (3.4%) rate free shipping or shipping promotions as the most important factor, up from 2.9% last year.
About the Survey
The NRF 2013 Holiday Consumer Spending Survey was designed to gauge consumer behavior and shopping trends related to the winter holidays. The survey polled 6,415 consumers and was conducted for NRF by Prosper Insights & Analytics, October 1 to 8. The consumer poll has a margin of error of plus or minus 1.2 percentage points. www.nrf.com
*Spending amounts reflect actual spending that occurred during 2012 holiday season, which was derived using government data from the U.S. Commerce Department in an effort to gauge average spend per person during the months of November and December.
**NRF defines the holiday season as sales in the months of November and December and forecasts holiday sales growth each year based on U.S. Commerce Department data such as previous month’s retail sales, the housing market, employment and more. NRF’s consumer spending surveys are not a part of the forecast model.
**Shop.org for the first time released an online holiday sales forecast. The online forecast is based on data collected by the U.S. Department of Commerce, the Federal Reserve, the U.S. Census, The Conference Board and NRF’s own calculations. NRF’s spending survey is not a part of the Shop.org forecast.