December 22 2011|05.00 AM PDT

US Holiday Spending Climate

Category: RetailTags: , , , , , ,

by Alex Gutow on December 22, 2011

With the 2008 holiday season in mind, many retailers are tepidly optimistic about this year’s seasonal shopping. Inventories are expected to increase by 0.7%, down from the 2.8% increase projection of 2010. According to surveys, 48% of CMOs questioned expected their sales to remain about the same as last year, with 41% seeing an increase and 11% already bah-humbugging about a decline.

Many of the weaker retail chains are weighing heavily on this season’s sales. This could be the make-it-or-break-it time for many of those who have gone through restructures and cutbacks to make it to this point. Syms and Filene’s Basement of Secaucus, Connecticut have filed for bankruptcy and plan to liquidate and close all 46 stores in the post season. Since liquidations will not start until after the holidays, there should be little impact on competitors business during the holiday season. While store closings are down by more than half from last year at this time, for many this is the proverbial do-or-die season as the belt has been tightened to the breaking point. There are projections of 5,000 stores closing in the coming year; not counting closings related to bankruptcies or liquidations.

Some are forecasting an increase in consumer spending for the 2011 shopping season, with increases of 3.6% over last year. According to surveys, consumers are expecting to spend an average of $704.18, which is down slightly from last year’s $718.98. Holiday shoppers plan to get the most for their money and say they plan to spend an average of $130.43 on non-gift, big-ticket items for themselves, homes and families; taking advantage of seasonal discounts and bargains.

This year, as we already saw from record-breaking Cyber Monday online sales, is the year for online and mobile shopping. It is expected that 49% will be trudging the halls of shopping centers while 43% will be home happily clicking away at their shopping lists. Some of the incentives being used by the cyber-santas are free shipping, discounts for multiple purchases or dollar amounts, points earned toward future purchases, free returns and just flat-out sale prices. (Source)

To help compete with online shoppers, there has been a bevy of advertising and offers from the more traditional brick and mortar sector. One of the enticements is the return of lay-away for a 20% or 25% deposit. These plans vary and some charge a $5 service fee. Some retailers offering lay-away are Walmart, Sears, Kmart, Best Buy and Toys R’ Us. Smaller businesses also got a boost in sales thanks to the Small Business Saturday promotion by American Express, which supported small businesses during the busiest shopping weekend of the season.

Overall, there seems to be a hopeful optimism among many retailers, especially with sales from both Black Friday and Cyber Monday beating out past predictions. Only time will tell what customers are actually comfortable spending this season and which retailers will walk away with a nice Christmas bonus.

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