Target and Toys R Us posted overall sales declines during the holidays.
U.S. consumers will spend $169.1 billion on gifts this season, 2.5% less than last year, according to a survey by Harrison Group. Households with incomes below $75,000 will spend 7.6% less, while those over $75,000 plan to spend 3.1% more.
Rising fuel and food costs will cut into holiday gift purchases by the less affluent, while wealthier consumers and teens plan to spend freely during the holiday season, according to the survey by market research firm Harrison Group.
Overall, the firm predicts U.S. consumers will spend $169.1 billion on gifts this holiday season, 2.5% less than last year. Households with incomes below $75,000 plan to cut gift spending by 7.6% to $83 billion, while households above that income level will spend almost $82 billion, 3.1% more than last year. And teens plan to spend $4 billion on gifts, 2.4% more than last year. The results are based on an online poll of 1,300 adults and 1,100 teens.
“For budget-strapped middle-income families, this will be less an ‘iPod holiday season’ and more an ‘iNeed holiday,” says Jim Taylor, vice chairman of Harrison Group. “Consumers at the high end of the market appear to be unaffected by economic uncertainty and will spend with gusto.”
Teen shopping, Taylor says, will be driven by continued income growth among that demographic, with the average working teen having nearly $600 per month to spend in discretionary income. “Teens will be exchanging small to substantial gifts-game systems, clothing, music and toys-designed to communicate depth of feeling and connection through brands,” Taylor says.
While this survey did not explore online shopping plans, a Harrison Group study earlier this year found the average U.S. consumer spends 1.9 hours a week shopping online, and that 71% use the web to research items they’re considering buying. 42% of teens and 77% of their parents reported having made an online purchase in the previous six months, with an average of $204 spent online in the previous six months by those who shop via the web.