holiday season

Economy to Impact Two-Thirds of Families this Holiday Season

Retailers are about to embark on the holiday season of the serious bargain hunter. According to NRF’s 2009 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, U.S. consumers plan to spend an average of $682.74 on holiday-related shopping, a 3.2 percent drop from last year’s $705.01.

It comes as no surprise that the economy was an overriding theme throughout this year’s survey. Two-thirds of Americans (65.3%) say the economy will affect their holiday plans this year, with the majority of these consumers saying they’re adjusting by simply spending less (84.2%). People will also be shopping for sales more often (55.0%), using more coupons (41.7%) and putting up last year’s decorations (34.0%). Many Americans will also make changes in gift-giving, planning to buy more practical gifts (36.0%), buying a joint gift for kids or parents (17.3%), and making more gifts (16.7%). Additionally, more than one-fourth of Americans (28.6%) say the economy is forcing them to travel less or not at all for the holidays.

“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.”

Americans’ eagle-eye on bargain hunting is adjusting the priorities of many shoppers. According to the survey, more than half of holiday shoppers say that sales and price discounts (43.3%) or everyday low prices (12.7%) will be the most important factor when deciding where to shop. Factors like selection (21.0%), quality (11.8%), convenience (4.9%) and customer service (4.4%) declined from last year.

Not surprisingly, the majority of holiday shoppers (70.1%) will purchase from discounters this year, though more than half (55.8%) will also shop at department stores. Grocery stores (45.0%), the Internet (42.4%), clothing stores (33.8%) and electronics stores (31.8%) will also be popular destinations. In addition, one in ten holiday shoppers (11.4%) 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 NRF’s Port Tracker report, released in September, traffic to the nation’s 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 NRF President and CEO Tracy Mullin. “Once the most popular items are gone, retailers won’t have anywhere to get them, so if there was ever a holiday season to buy early, this is it.”

Whether they’re shopping to get the best selection or trying to stretch out spending over a longer period of time, many holiday shoppers are starting early. According to the survey, 39 percent of Americans will begin their holiday shopping before Halloween, which is comparable to previous years.

As in previous years, three-fourths of Americans’ holiday budget will be spent on gifts. While spending on family members will decline by a slight two percent ($387.06 in ’09 vs. $395.15 in ’08), gifts for friends ($66.77 vs. $80.13) and co-workers ($19.26 vs. $22.63) will see double-digit drops. Americans also plan to spend about five percent less ($34.81 vs. $36.88) on “other” gifts for people like babysitters, teachers and clergy.

Candy and food spending may be one bright spot this year, with the average person planning to spend $10 more in that category than last year ($90.26 in 2009 vs. $80.28 in 2008). Spending on other non-gift categories like decorations ($40.75 in ’09 vs. $43.45 in ’08), greeting cards and postage ($26.77 vs. $27.39), and flowers ($17.05 vs. $19.10) is expected to drop.

“While the economic climate has shown some improvement from last holiday season, retailers are not out of the woods yet,” said Phil Rist, Executive Vice President, Strategic Initiatives, BIGresearch. “With a variety of factors still up in the air, including uncertainty over job security, many Americans just aren’t buying into the talk of recovery.”

Though Americans were less inclined to purchase gift cards last season, the popular gifts retain their spot at the top of the list among gift recipients. According to the survey, 55.2 percent of adults would like to receive a gift card this holiday season, with clothing (48.8%), books and DVDs (48.6%) and electronics (33.2%) among other popular choices.

NRF continues to expect holiday sales to decline 1.0 percent to $437.6 billion.

holiday season

Retailers Brace for Cold Sales and Hiring this Holiday Season

According to a recent survey by Hay Group, 72 percent of retailers predict holiday sales will be about the same or lower than last year. As a result, 57 percent of retailers are reducing staffing levels for the 2009 holiday season — a dramatic shift compared to only 29 percent that decreased staffing levels last year.

Hay Group’s survey, in its third year, analyzed responses from 25 top U.S. retailers including American Eagle Outfitters, Best Buy, Saks Fifth Avenue and Target in September 2009 to understand retailers’ plans for the 2009 holiday season.

According to the survey, 62 percent of retailers are seeing more seasonal applicants this year, however, 40 percent are hiring fewer seasonal workers, and 64 percent already have lower than normal staffing levels.

“With sales numbers down and consumers spending less, planning holiday staffing needs has been difficult for retailers this year,” said Craig Rowley, Vice President and Global Practice Leader for Hay Group’s Retail practice. “Retailers are doing what they can to survive the season, but more importantly, if the consumer decides to go on a spending spree this season, they are poised to respond fast with merchandise and staff.”

Among the highlights from the September 2009 Hay Group retail survey:

• Seasonal Worker Staffing Levels: Compared to last year, 48 percent of respondents are planning to hire the same amount of seasonal workers for the holiday season, and 40 percent are planning to hire five percent to 25 percent fewer workers. The majority of respondents (60 percent) indicate that the ratio of permanent to seasonal store employees is about the same as last year; however, 32 percent indicate that they plan to hire fewer seasonal workers and more permanent staff.
• Sales Expectations: Retail sales expectations are lower for this holiday season – 36 percent of respondents expect sales to be about the same as last year, and 34 percent expect sales to decrease by five percent to 25 percent. Some retailers (28 percent) remain optimistic this year and expect an increase in sales, however this is a drastic drop from the 60 percent of retailers that expected an increase in sales this time last year.
• Store Promotions: Retailers have changed their promotion strategy in response to current economic conditions, with 43 percent of respondents indicating that they will be running more promotions and/or deeper discounts this year. Stores have also shifted their focus from running the most store promotions on Black Friday (35 percent, compared to 45 percent last year), and will instead run consistent store promotions from now until New Year’s Day (43 percent of respondents). In addition, 13 percent of respondents indicate they will run the most promotions in mid December leading up to Christmas, and nine percent will run the most promotions on the day after Christmas.

“Retailers are planning for a challenging Christmas season, and to avoid the massive markdowns they had to take last year, they have reduced inventory and staffing levels to control costs,” added Rowley. “That said, retailers have their fingers crossed that they are wrong.”