Another ho-hum retail season, or will wallets open up?

McClatchy NewspapersNovember 24, 2010 

WASHINGTON — Consumer holiday-spending surveys suggest that retail sales should look much like last year's ho-hum performance, but any surprise is likely to be on the upside, with Americans perhaps opening their wallets a bit more than expected.

"It definitely looks like consumers are no more pessimistic than they were last year, which I think is pretty good news, because we could err on the more positive side," said Lynn Franco, the director of the consumer research center for The Conference Board, a private business-research center. "We should be able to at least match last year's sales."

The Conference Board Tuesday released its annual survey of Christmas gift spending. It said that U.S. households are expected to spend an average of $384 on gifts this holiday season. That's $6 less than last year's estimate of $390, not exactly robust.

"The economy has improved, but it's still operating below par. We haven't really seen a significant dent in unemployment rates, even though we've been adding jobs," Franco said in an interview. "It's kind of where we were last year. I guess that's kind of better than where we were two years ago!"

Franco's survey found that 1 in 4 U.S. households will spend more than $500 on gifts this year, 39 percent expect to spend somewhere between $200 and $500 and 37 percent will spend less than $200.

Those estimates are in line with the National Retail Federation, which represents national chain stores. It expects total holiday sales in the neighborhood of $447 billion, an increase of 2.3 percent over last year.

That would be slightly off the 10-year average annual increase of 2.5 percent, but better than last year's increase of 0.4 percent — and much better than the 3.9 percent sales decline during the 2008 holidays.

Toon Van Beeck, a senior retail analyst for industry research group IBIS World Inc., predicts a slightly better 3.6 percent increase in holiday sales. Rather than rely on promotions, he said, retailers have brought down prices in an attempt to maintain profit margins.

"No retailer wants to fall back into 2008," he said, predicting that retailers will continue to offer fewer choices and closely control their inventory. "Consumers will remain price conscious this year, they will be looking for the sales."

Shoppers this year will be as bargain-minded as ever, according to a survey by the consumer electronics website Its Black Friday/Holiday Spending Study suggested there are clear price points that consumers are seeking.

All respondents queried by Retrevo's researchers said they'd stand in line on Black Friday for a 37-inch high-definition television if it were priced below $200. Some 69 percent said they'd do so if it were priced at $250 and only 36 percent of them would do so at the $300 price point.

Some 62 percent of Retrevo's respondents said they'd spend about the same on electronics this year; only 16 percent said they'd spend more. Similarly, 70 percent said they'd spend about the same for movies and music; only 12 percent said they'd spend more.

The most popular gadgets this year, Retrevo said, will be Apple's iPad, laptops and high-definition television sets.

One way this season differs from last is that there's been more promotion ahead of Black Friday, with retailers offering sneak peeks at their "Door Buster" offerings and promoting specials via Twitter, Facebook and other social media outlets.

"There's a little more buzz about Black Friday again," said Ted Hurlbut, a consultant to major retailers.

Back-to-school and Halloween sales were better than expected for retailers this year, he said, and while monthly statistics continue to bounce around, the trend is definitely one of modest improvement.

"I don't think anybody thinks we're talking about something like pent-up demand, but it just means that people are willing to spend a little more freely this year," Hurlbut said. "I think that goes to a sense that the employment picture has stabilized, that people that have jobs are starting to feel comfortable that they're not going to lose their jobs and that's really the starting point for a change in mood. If you are one of the 90 percent that's working, and you have greater confidence that you're not going to lose your job, you are going to be a little more willing to spend."


The Conference Board survey results survey results

National Retail Federation forecast


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