BIGresearch’s Consumer Intentions and Action Survey found that more than half of consumers plan to spend the same this holiday season and almost a third will spend less. Consumer confidence, which had been sliding since last winter and reached a new low over the summer, has at least bottomed out in September’s survey.
Consumer confidence has been battered in recent months not only with the recession but the decline in the stock market, revelations about corporate misdeeds and layoffs. Constant worries about security and more recent concerns about war with Iraq are also weighing on consumers’ minds.
“There’s a whole bunch of things on their minds,” said Gary Drenik, a partner in Worthington, Ohio-based BIGresearch.
And those concerns are projecting ahead into the holiday shopping season so crucial for retailers and marketers alike.
“Consumers are cautious. They’re going to have to be in tight spend, they’re practical and bargain-oriented. They’re only buying what they need and not impulse spending,” Drenik said.
Big-ticket items aren’t going to be big this year, although most product categories are holding steady or increasing slightly from low points over the summer. Consumers are putting more emphasis on the home – and related products and services – and less on dining out and going out. Their shopping habits are reflecting that emphasis. And they’re focusing less on brands, more on discounters like Wal-Mart and Kohl’s and away from department stores.
“Consumers are looking for value and comfort, not necessarily brand retailers,” Drenik said.
The survey of 5,000 people nationwide – parts of which have been partnered with the National Retail Federation – drilled a little deeper into who’ll be doing more shopping, less shopping and staying the same. Seventy-five percent planned to pay for their purchases with cash, checks and debit cards.
The people who will be spending more are mostly young, single or new families, between 18 and 44. It’s the top group in the survey for $50,000 or more a year household income and the least likely to tail off in spending. That might be because they are the most confident in terms of an economic rebound happening soon; 46.8% are confident of an improvement soon.
Slightly less than 30% of those surveyed will be spending less this holiday season. They’re mostly between 35 and 54 and are either married or living with a partner, many owning their own home. They say a lower family income is the main reason why they’re spending less this holiday season, and they’re also the most likely to curtail spending in the next three months. Only 18.7% think the economy’s going to improve anytime soon, the least optimistic of the groups.
The rest – and the most, at 62.4% -- will be spending about the same. The majority are married and 30.6% are older than 55 and 64.5% own their own homes. Slightly over 33% are confident or very confident that the economy will pick up soon.
Drenik said it’s a picture of a nation that’s still sorting out troubles at home and abroad.
“There’s all these mixed signals, a lot of things unresolved out there,” he said. The stock-market drops have really had an impact on overall consumer confidence, Drenik said. Consumer confidence stayed relatively stable after 9/11 and through the holiday season until February or March.
Drenik said advertisers are going to have to figure out a way to appeal to the weary consumer. One big way might be price.
Sarah Thompson, spokeswoman for the National Retail Federation, said retailers realize they’re going to have to heavily promote their products to move them. It might not take the form of heavy markdowns but discounts will play a role, she said. The federation predicted that holiday sales will increase 4% over last year, when sales rose 5.6%.
What’s different this year over last year is the continued national and international worries. Last year, consumers spent more because they felt it was their duty to do so, she said. Retailers aren’t banking on that this year.
“A lot has changed since then. We don’t anticipate any of these effects this season,” she said.