Shoppers’ spending intentions contradict NRF holiday forecast
Shoppers responding to a recent National Retail Federation survey said they expect to spend slightly less this holiday season in contrast to an earlier economic forecast by the trade group which indicated spending during November and December would rise by 3.9%.
The discrepancy between the two figures relates to the manner in which the information was collected coupled with the fact that shoppers’ stated intentions often differ materially from their actual behavior. Even though the recent survey of shoppers shows a 2% decline in average spending per person the 3.9% growth figure for the November and December timeframe is still valid because economic conditions are far from the levels seen in 2009 when sales actually declined.
“Though the foundation for solid holiday season growth exists, Americans are questioning the stability of our economy, our government and their own finances,” said NRF president and CEO Matthew Shay. “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.
Average spending per person this holiday season will decline 2% to $737 from $752, according to the survey of 6,415 consumers conducted October 1-8 by Prosper Insights & Analytics. Conversely, an earlier forecast conducted by NRF based on a wide range of data from the U.S. Commerce Department forecast holiday spending, as defined as the months of November and December, would rise 3.9%.
Regardless of whether either number proves accurate, the more recent survey sheds interesting light on the rapidly evolving behaviors of shoppers in the digital world. For example, more than half of survey respondents said they plan to shop online this season with the average person completing about 39.5% — the highest level ever — of their shopping online. NRF’s digital division, Shop.org, is forecasting online sales will grow between 13% and 15% to as much as $82 billion.
A key enabler of the increased digital activity will be mobile devices. The survey showed that more than half (56.3%) of holiday shoppers say they own a smartphone, and more than one-third (34%) 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 while 63% of tablet owners will use their device to shop, compare prices and look up product information.
While the digital shift is undeniable, two key variables with the potential to exert a powerful impact on spending involve the budget impasse in Washington and the steady decline in gas prices.
For the first time, NRF asked holiday shoppers if the political gridlock in Washington around U.S. fiscal concerns would affect their holiday spending plans and about one third said the situation would somewhat or very likely affect their spending plans. When asked specifically about the overall state of the economy and how it would affect their spending plans, more than half of consumers said the economy would in some way impact how they spend this holiday season. Specifically, 79.5% plan to spend less overall, looking to cut corners and tighten budgets where they can, according to the survey.
Of course, personal financial circumstances tend to be the prime determinant of how much an individual spends during the holidays. So with the price of gas falling steadily and some forecasts calling for sub-$3-a-gallon prices soon American consumers could get a meaningful psychological lift just when retailers need it the most.