NRF Predicts Price-Obsessed Holidays

30 percent off signA new survey shows that the average American shopper plans to spend just $832.36 on this year's holiday, a gain of just 1.9% from the $816.69 reported last year. The National Retail Federation, the leading trade group for stores, says that is the smallest gain since it began fielding its survey in 2002--and that for the first time, consumers say they plan to spend less on gifts for family than they did less year. 

And while retailers have been bracing themselves for subdued sales for months now, with many reining in their earnings outlooks and paring back inventories, it's difficult to estimate precisely how the latest wave of recession headlines and market fluctuations will reshape holiday plans. The Reuters/University of Michigan Surveys of Consumers says its confidence index nosedived to 57.5 in October, from 70.3 in September--its steepest monthly drop ever. (The index has been around since 1952.)

The NRF survey says that consumers plan to be laser-focused on saving money--with 40% saying that sales or special promotions will be the major factor in where they shop, and 12.6% selecting stores based on everyday low prices. Selection and quality matter less--mentioned by 21.5% and 13.4% of respondents, respectively. And forget about customer service--only 5.2% say it will play a role in where they buy their gifts.

"Retailers are going into this holiday season with their eyes wide open, knowing that savings and promotions will be the main incentive for shoppers," the trade group says in its release of the 2008 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch. "No one is canceling Christmas because money is tight, but consumers will be sticking to their budgets and looking for good deals when deciding where to spend this holiday season."

This year, the NRF reports, the average person will spend $466.13 on gifts for family--down from $469.14 last year, $94.52 on friends, $26.70 on coworkers, and $43.50 on other gifts. Consumers also plan to spend $51.43 on decorations, $32.43 for greeting cards and postage, $95.04 on candy and food, and $22.61 on flowers.

While the NRF predicts that the number of people who actually buy gifts online will be flat (44.2% in 2008 versus 44.3% in 2007), shoppers will use the Internet to more aggressively track down bargains. It estimates the Web will influence 33.6% of holiday purchases, compared to 30.2% last year and 28.9% in 2006.

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