Rapaport, October 28, 2009: Consumer Spending Trends For Christmas

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U.S. retailers will have to adapt to the "serious bargain hunter" this Christmas sales season, according to the National Retail Federation (NRF) shopping trends report. According to NRFs 2009 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, consumers plan to spend an average of $682.74 on all holiday-related shopping, which is a 3.2 percent drop from 2008. However the average spending on only gifts will fall 5 percent. To make matters worse, household incomes have fallen this year on top of a 3 percent decline in 2008 and consumer confidence has fallen this month making Christmas shopping season 2009 a real challenge to predict.

NRF's survey confirmed that two-thirds of consumers (65.3 percent) directly blamed the economy for scaled back holiday plans this year, with the majority of these consumers saying theyre adjusting by simply spending less. People will also be shopping for sales more often and making changes to the way they gift -- with less.

While last holiday season was filled with chaotic confusion, adjusting to uncertainty has now become routine for many Americans, said NRF president and CEO Tracy Mullin. This holiday season will be a bit of a dance between retailers and shoppers, with each group feeling the other out to understand how things have changed and how they must adapt.

According to the survey, more than half of holiday shoppers say that sales and price discounts (43.3 percent) or everyday low prices (12.7 percent) will be the most important factor when deciding where to shop. Factors such as product selection (21 percent), quality (11.8 percent), convenience (4.9 percent) and customer service (4.4 percent) all declined from readings in 2008.

The majority of holiday shoppers will purchase from discounters this year. In addition, one in 10 holiday shoppers (11.4 percent) will buy gifts or other holiday-related merchandise at thrift stores or resale shops. Retailers are compensating for soft sales this holiday season by cutting back on inventory. According to NRFs Port Tracker report, released in September, traffic to the nations ports has scaled back to levels not seen since 2003.

In anticipation of weak demand, many retailers scaled back on inventory levels to prevent unplanned markdowns at the end of the season, said Mullin. Once the most popular items are gone, retailers wont have anywhere to get them, so if there was ever a holiday season to buy early, this is it.

Phil Rist, executive vice president of strategic initiatives for BIGresearch, added, While the economic climate has shown some improvement from last holiday season, retailers are not out of the woods yet. With a variety of factors still up in the air, including uncertainty over job security, many Americans just arent buying into the talk of recovery.

NRF predicts that overall holiday sales will decline 1 percent $437.6 billion. Sales fell 3.4 percent in 2008, according to NRF's data. The spending survey polled 8,431 consumers in the U.S. and had a margin of error of plus or minus 1 percent.

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