Shoppers Plan to Increase Christmas Spending by 1.9% in 2008

The National Retail Federation, “the world’s largest retail trade association” has issued the results of its “2008 Holiday Consumer Intentions and Actions Survey.” The survey found that “…U.S. consumers plan to spend an average of $832.36 on holiday-related shopping, up a paltry 1.9 percent over last year’s $816.69. This represents the lowest increase in planned consumer spending since the survey began in 2002.”

The natural response to such a report is to be surprised that there is an increase at all and to wonder why what looks like good news is perceived as bad news. I contacted someone who understands this sort of thing and he tells me inflation is a major culprit.

According to the US Department of Labor Consumer Price Index, inflation in September, 2008 was up 4.9% ahead of September, 2007. So, if you were to use that as a measure, you subtract 4.9% from the 1.9 % projected increase and have a 3% decrease in real spending for the holidays.

On the other hand, spending on children should be higher than for other family members so the toy industry could fare better than what the overall picture tells us about spending. 

There was quite a bit of interesting information in the survey. Here are some highlights:

• “Though shoppers choose to visit stores for different reasons, consumers say one factor will play the biggest role in buying decisions this year: price. According to the survey, 40.0 percent of shoppers say that sales or promotions are the largest factor when determining where to shop, while another 12.6 percent state that everyday low prices are most important.”
• “As in previous years, gift giving is the largest component of shoppers’ budgets… For the first time in the survey’s history, people say they plan to spend less on gifts for family members …Spending is expected to be particularly weak among young adults, as 18-24 year-olds plan to spend $50 less on gifts than one year ago.”
•  “As the Internet becomes more of a mainstay in the retail landscape, Americans are heading online to compare prices, research retail locations, and look for gift ideas before heading to stores. Although the number of people buying gifts online is expected to remain flat over last year (44.2% in 2008 vs. 44.3% in 2007), shoppers will rely on the Internet more than ever to browse for holiday gifts and research products.”  

I really recommend you read the entire survey as it is filled with information. Click here to read the survey results.