NRF Forecasts Cloudy Holiday Season - Update
The National Retail Federation (NRF) is not predicting a holiday full of cheer for U.S. retailers. According to the NRF 2009 Holiday Consumer Intentions and Actions Survey, released today, average U.S. consumer spending will decrease 3.2% compared to last year.
In 2008, U.S. consumers spent an average of $705.01 on holiday-related shopping. This year, the NRF expects that average figure to drop to $682.74. Two-thirds of Americans (65.3%) say the economy will affect their holiday plans this year, with 84.2% of these consumers saying they’re adjusting by spending less.
In addition, 55% of consumers will be shopping for sales more often, 41.7% will be using more coupons, and 34% will be putting up last year’s decorations. Many consumers will also make changes in gift-giving, with 36% planning to buy more practical gifts, 17.3% buying a joint gift for kids or parents, 16.7% and making more gifts. There will also be less holiday travel this year, as 28.6% of consumers say the economy is forcing them to travel less or not at all for the holidays.
The majority of consumers, 70.1%, will purchase from discounters this year, though more than half, 55.8%, will also shop at department stores. In addition, 45% of consumers will shop at grocery stores, 42.4% will shop on the Internet, 33.8% will shop at clothing stores, 31.8% will shop at electronics stores, and 11.4% will shop at thrift stores or resale shops. Looking at specific product categories, consumer spending on candy and food is expected to rise 1.2%, from $80.28 to $90.26. Meanwhile, consumer spending on decorations is expected to drop 6.2%, from $43.45 to $40.75, and spending on greeting cards and postage is expected to drop 2.2%, from $27.39 to $26.77. Spending on flowers is expected to decrease 10.7%, from $19.10 to $17.05.
The NRF’s negative Holiday Consumer Intentions and Actions Survey follows its recent negative 2009 holiday forecast projecting holiday retail industry sales to decline 1% this year, from $441.97 billion to $437.6 billion. While this number falls significantly below what the NRF has tracked as the 10-year average of 3.39% holiday season growth, the decline is not expected to be as dramatic as last year’s 3.4% drop in holiday retail sales from $457.75 billion. The holiday drop is also expected to be less severe than the NRF’s projected 3% decline in 2009 annual retail industry sales from $2.39 billion to $2.32 billion. Last year marked the first decline in holiday sales recorded by the NRF since it started tracking them in 1992.
The NRF says some signs of economic recovery, such as improved retail sales in August and momentum in the stock market, exist. However, the NRF expects continued consumer uncertainty over job security and housing values to take a toll on 2009 holiday spending. And, as retailers become even more promotional, the NRF says certain popular holiday categories like apparel and electronics may experience deflation due to aggressive sales.
Other recent holiday forecasts offer mixed predictions for how retail will fare this holiday season. Yesterday, comparison shopping site PriceGrabber.com released its Holiday Forecast, indicating that 53% of consumers expect to spend less on holiday shopping this year than last year. This is an improvement from 2008, when 71% of consumers expected to decrease their annual holiday spending.
According to a recent survey from The Nielsen Company, the 2009 holiday season should deliver virtually flatsales results. The survey indicates 44% of consumer households will spend the same on the 2009 holidays as they did in 2008, with 42% planning to spend less and only 4% planning to spend more.
Two other recent research reports also predict flat holiday sales performance this year. Retail Forward expects flat holiday growth in all retail channels except automotive, food, and drug.
In addition, research firm Deloitte is also predicting flat holiday sales this year. Deloitte’s 2009 holiday forecastexpects total 2009 holiday sales to register a 0% change, excluding motor vehicles and gasoline, from last year. This would be an improvement from what Deloitte tracked as last season’s 2.4% decrease, the first decline in holiday sales according to Deloitte’s analysis of Commerce Department data dating back to 1967.
In one positive sign for retailers, the most recent American Express Spending and Saving Tracker Update indicates 80% of overall respondents intend to make end-of-year holiday gift purchases, with 22% planning to start in October, 30% planning to start in November and 28% planning to start in December.