Bigresearch was out with one the earliest predictions for the upcoming holiday season. The firm’s July 2009 survey revealed that nearly 7 in 10 consumers will be ‘spending less on everyone’ this year. These consumers, seeking to decrease their costs, mentioned a big interest in buying items on sale, comparison shopping and online research.
Little has changed since July. Despite some promising indications – the University of Michigan Surveys of Consumers reading of 70.2 in September and lower inventories at wholesalers – many marketers are expecting a rough holiday season. For example, Wal-Mart Stores CEO Mike Duke warned the investment community last week that he expects a “late Christmas” season this year. To adjust his company’s strategy, Duke said, “you won’t see us putting up Christmas decorations in September.” Likewise, it would seem that the retail giant might delay its usual holiday marketing blitz.
As Douglas McIntyre points out in his bearish post on 247WallSt.com, the amount of outstanding consumer credit continues to fall. So while consumer sentiment might be improving, people don’t want to put themselves in a risky financial situation by spending too much or increasing outstanding debt. A significant portion of consumer spending has been fueled by credit in the past few decades but that seems to have come to an end. The jobs recovery has not yet started which is another reason consumers don’t feel positive about spending heavily for holiday gifts.
The bottom line is the upcoming season may be delayed, as Wal-Mart expects, or subdued. Either of these paths means marketing programs will undergo big changes this year as well.[Sources: Source: Dolliver, Mark. “A Holiday Spending Forecast in July.” BIGresearch data via Adweek. July 16, 2009; Wal-Mart CEO expects ‘late Christmas’, Chain Store Age, 9.11.09; Reese. Chris. U.S. consumer sentiment improves, Reuters, 9.11.09; McIntyre, Douglas. Consumer Spending. No One Has a Dime. 247Wallst.com, 9.9.09.]