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A recent Brand Keys survey found consumers are planning to cut their holiday spending by 5% from 2007. Meanwhile, a poll of retail marketers finds they expect holiday sales will fall by 2.7%, reflecting unprecedented pessimism about the economy.
As the economic crisis deepens, both consumers and retail marketers are scaling back their expectations for the 2008 holiday season.
A Brand Keys Inc. survey Oct. 16-20 found consumers planning to cut their holiday spending by 5% from last year, although more are planning to shop online. Meanwhile, a survey of retail marketers finds they expect holiday sales will fall by 2.7%, reflecting unprecedented pessimism in the face of the economic crisis. That survey was conducted by accounting and consulting firm BDO Seidman LLP.
The results of the Brand Keys survey of 16,000 consumers were far more pessimistic than a similar survey by the National Retail Federation released a few weeks ago, which projected a 1.9% increase in holiday spending. The difference in results stems from the few weeks’ difference in timing, says Robert Passikoff, president of Brand Keys. The NRF survey was conducted Sept. 30-Oct. 7; Brand Keys’ Oct. 16-20. “They were talking to an audience that wasn’t exposed to the full effects of the meltdown,” Passikoff says. “People are depressed and scared.”
60% of consumers responding to the Brand Keys survey said they expected to spend the same amount on holiday gifts this year as last, 35% less and 5% more. 95% planned to shop online, a 35% increase from last year’s survey. 90% planned to shop at discount department stores and 70% by catalog, both up 20% from last year. 70% said they would shop at traditional department stores, down 5%, and 30% planned to shop at specialty stores, a decrease of 33% from last year’s survey.
In the BDO Seidman survey of chief marketing officers at U.S. retailers conducted this month, 39% said they expect sales to decrease during this holiday season from last year, 41% say sales will be flat and 20% expect an increase. In last year’s survey, only 5% projected a drop in sales and 41% expected an increase. 84% of the marketers expect to offer more promotions this year, with 42% citing in-store promotions, 37% markdown and 20% online promotions.
Another survey of 1,600 consumers, conducted in August, found 34% are closer to their credit limits than they were a year ago, 45% said they had used their credit cards less often in the past 90 days in favor of non-credit payment options, 48% said they were delaying purchases because of economic uncertainty, and 55% said they had less credit available than they did last year.
The survey found 60% of respondents had begun their holiday shopping, and 13% planned to do most of their shopping on the Monday after Thanksgiving. The quarterly survey, called the eBillme Online Spending Index, was conducted by Javelin Strategy and Research for eBillme, a service that lets consumers pay for online purchases with money in their bank accounts.
A less frightening survey from IBISWorld Inc., a business research firm, suggests consumers plan to spend $5.77 billion this year on Halloween, 5% more than last year. George Van Horn, senior analyst at IBISWorld, compares it to Halloween 2002 when the economy was still in the doldrums following the attacks of Sept. 11, 2001, and Halloween spending surged. “Retailers will be pulling out all the promotional stops to ensure this year follows the pattern of 2002,” he says. Costumes will account for 35.9% of Halloween spending, candy 30.5%, pumpkins and other decorations 27.4% and greeting cards 6.2%, IBISWorld says.