Reading the outlook reports for Holiday 2012 can really make your head spin. It’s hard for luxury retailers to know if they should be decking the halls or hiding behind the tree. One report declares that affluents will be buying meaningful gifts for loved ones – and even better gifts for themselves. Another predicts a sea of consumable gifts and gift cards. A third predicts that, due to an Obama victory, the wealthy will be keeping it lean this year, since they believe the President will be hungrily eyeing their wallets.
With all these conflicting predictions, who are marketers to believe? And how should they really be preparing for the holidays? Unfortunately, taking a deeper look at the holiday forecasts doesn’t offer a lot of clear direction.
Pam Danziger of the Unity Marketing predicts a weak holiday shopping season as a direct result of the recent election. Danziger notes that we typically rely on the middle class to keep the retail economy moving forward, but that, by the Obama administration’s own admission, this is the demographic that is feeling the most squeezed in these still-trying economic times. In October, she commented that, “If Obama is elected, I think we will see a weak retail Christmas this year. The affluents - the only ones who have the financial ability to spend if they wish -- know that an Obama administration is coming straight for them, to raise their taxes and cripple their small businesses with new regulations and healthcare costs,” says Danziger. (I think we can all guess who Pam voted for this year.)
In contrast, Harrison Group and American Express take a nonpartisan approach to their holiday predictions, resulting in a forecast that is … exactly the opposite of Danziger’s. Their Annual Survey of Affluence and Wealth in America states that while spending is down overall, the top 10% of American earners will actually be spending 20% more in the 2012 holiday season. Cara David, senior vice president of corporate marketing and integrated media at American Express Publishing, said “Luxury retailers can take comfort in the fact that 39% of the ‘Top 1%’ plan to splurge on gifts for their significant others to make the holiday season memorable. Women especially, are also looking to purchase gifts for themselves in categories like fashion, jewelry and accessories.” Hm. So, apparently American Express cardholders in the most affluent households aren’t letting the election results dampen their holiday season.
Finally, a completely positive forecast comes in from the National Retail Federation to ensure we have every conceivable angle covered. According to NRF President Matthew Shay, holiday shopping will increase 4.1% this year over last, reaching a total of $586 billion. In statement, Shay said "In spite of the uncertainties that exist in our economy and among consumers, we believe we'll see solid holiday sales growth this year.” Note that the NRF prediction addresses the whole market, not just the affluent. But an increase in spending is certainly good for all retailers, from luxury to discount.
So, what can we learn from these completely contrasting reports? Absolutely nothing. Methodologies vary, sample sets vary, and data can be interpreted six ways from Sunday. No one is lying here, and no one is completely wrong, but obviously no one can be completely correct, either. At the end of the day, luxury marketers really have to read all the reports, look closely at the data on which they’re based, and then draw their own conclusions. I think it’s a safe bet that most shoppers are going to be a little bit conservative in this economy, and that we should be planning accordingly.
In holiday terms: Count on at least few more sugar plums, and a few less lumps of coal. And if you really want to enjoy the season, read fewer retail forecasts.