Survey Says...Merry Shoppers, Shallow Pockets
There’s no debate here: consumers are cheerier this holiday season than they were last year, according to the findings of a recent survey from Deloitte.
But the brighter spirits may not translate into a Merry Christmas for retailers, according to the survey’s findings.
Although more consumers feel better about the chances for an improved economy next year, shoppers remain cautious with their holiday budgets. They expect to wrap up fewer packages as they have crossed more people off their holiday list. But those lucky enough to make the cut will likely enjoy a better gift, according to the survey’s findings.
One half of the more than 5,000 consumers polled in Deloitte’s survey said they expect the economy to improve next year, up from last year when about just about one-third of consumers expected economic improvement ahead.
Even better for retailers, fewer shoppers — some 37 percent — are expecting to spend less on the holidays this year than they did last year. That’s the lowest level since 2006.
But despite these positive signs, there are some challenges.
First, consumers plan to spend about $386 on holiday gifts. That’s down from last year’s survey, when shoppers said they would spend $395.
One factor contributing to the decline is the expectation that consumers will give an average of 12.8 gifts this year, said Jackie Fernandez, a partner in Deloitte’s retail practice. Consumers have been trimming their gift lists every year since 2007, when they gave an average of 23.1 gifts during the holidays. (Read More:Holiday Shoppers to Splurge on Themselves This Year)
Fernandez said she credits consumers’ newfound optimism to the stability of the current economic picture, but she said the expected spending level reported by consumers reflects that they remain cautious.
“They are really focusing on a core group of people for gift giving, and are expecting to spend a higher dollar value on them,” Fernandez said.
Last month, Deloitte forecast that holiday spending this year would rise to between $920 billion and $925 billion, or an increase of 3.5 percent to 4 percent over last year. (Read More:It's Beginning to Look a Lot Like...Holiday Spending)
Waiting for Election Day
Another factor that will impact holiday spending is the U.S. presidential election. Nearly one-quarter of respondents said they would delay their holiday shopping until after the election has been decided.
It’s not clear why because half of the people surveyed said the outcome of the election would not change their spending plans, and 23 percent said they were “undecided” about whether the election would change their spending plans.
Fortunately, even with the expected election delay, retailers should have plenty of time to get shoppers into the store. Not only are there five weekends between Thanksgiving and Christmas this year, but shoppers continue to stretch out their spending.
Nearly 3 in 10 survey participants expect to shop on Black Friday — that’s the same amount as last year. However, many of these people said the majority of their purchases will come later.
More than half, some 58 percent, plan to shop in December, and among them, 25 percent will shop after Christmas. Some 12 percent of consumers expect they will do some holiday shopping in January.
But these delays in holiday shopping pose some risks, according to Fernandez. She said swings in the stock market, and in gasoline and food costs, could all hurt — or help — holiday spending in this conservative environment. (Read More:The 'Fiscal Cliff'—the Grinch That Steals Christmas?)
“When something happens, like a rise in gas prices that cuts off spending pretty quickly, because there is only so much disposable income to go around” Fernandez said. Shoppers don’t want to increase their credit card balances buying Christmas presents, she said.
“Forty-one percent of consumers have a specific budget in mind for the holidays,” she said.
“Omnichannel” Shoppers, A Retailer’s Best Friend
The timing of the purchases will be influenced by when consumers expect they can get the best deal. With 44 percent of shoppers saying they will only buy items on sale, it is clear that bargain hunting has become a holiday tradition. Nearly four in 10 consumers also expect stores to allow their salespeople to match competing prices.
Most shoppers will be heading to discount stores such as Wal-Mart or Target or online to sites like Amazon to do their shopping, but retailers should watch consumers who shop in stores, online and using their smartphones.
Those shoppers are the most valuable ones for retailers, according to the survey’s findings. So-called omnichannel shoppers expect to spend about $600, or about 71 percent more than those who plan to shop only in stores.
-By Christina Cheddar Berk, CNBC.com News Editor; Follow her @ccheddarberk.
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