Where Will Consumers Spend Their Holiday Money?
As the Thanksgiving holiday comes to a close, businesses are preparing for the winter shopping season. Last year consumer holiday spending was at a record low. This year is forecasted to have a slight improvement but businesses should be aware that this increase doesn’t guarantee to get them out of the red. So with little valuable room for mistakes, find out where and what consumers are planning to spend their money on.
“Consumers are telling us they will not cut back as much on spending as last year, but more so than in previous years,” said CUNA Chief Economist Bill Hampel. In fact, 43% of consumers plan on cutting back their holiday spending compared to 55% in 2008. Although these percentages are still significantly high compared to 21% in 2002, it is seen as a much needed improvement.
The major reason for the cutbacks in consumer holiday spending is how people assess their financial situations. CUNA/CFA reported that many consumers said their finances were worse at 36% while only 19% reported a better financial situation compared to last year and 44% said there was no change.
Even with this change in consumer holiday spending some novelties will be sacrificed. The top products expected to sell this year is expected to be necessities. On Christmas morning people will find gift cards and practical items such as toiletries. Nielson is predicting practical gifts will be on the rise as well with clothing, linens, kitchen supplies, alcohol and other household goods. More affluent consumers are expected to purchase home entertainment such as family games and movies.
Nielson also reported that holiday revenues will mostly be gained on the net. “Online retailers, as well as value retailers like dollar stores, discounters, and club stores will attract “the lion’s share” of holiday spending.” Before the season really gets going, it’s also a good idea to partake in social networks. As a retailer, staying in the minds of consumers will help as they search for gift ideas.