Good, Not Great
Retail sales during the winter holidays are a strong measure of economic activity and consumer sentiment. In Missouri’s trade sector, retailers depend on these sales for a substantial portion of their annual income. The holiday season comprises anywhere from 25 to 40% of retail annual sales, according to the National Trade Federation (NRF). Last year, holiday sales were lower than expected, representing 19.9% of total retail industry sales. Jewelry stores have the most at stake; last year, holiday sales at jewelry stores represented 32.5% of stores’ annual sales. State and local governments also rely on holiday sales for sales tax revenue.
Recent reports and surveys call for a two to nine percent increase in retail sales from 2005, due in part to lower-than expected gasoline and heating oil prices, moderate weather – recent, massive snowdump excepted -- and strong consumer demand, especially in electronics. (Tickle Me Extreme Elmo, anyone?)
Predictions: Four Yeas …
The NRF, the nation’s leading retail industry tracker, predicts that holiday spending will grow five percent this year to $457.4 billion. The average consumer plans to spend $791.10 on gifts, up from $738.11 last year, according to the 2006 Holiday Consumer Intentions and Actions Survey. (While they’re shopping, they will also spend $99.22 on themselves.) Americans also plan to spend an average of $91.20 on candy and food and $30.57 on greeting cards and postage. The survey also found that most Americans plan to increase spending on flowers ($18.98 vs. $15.78 last year) and decorations ($46.49 vs. $40.86 last year).
The survey examined shoppers’ intentions in the Northeast, Midwest, South and West, and found that Midwesterners planned to spend less on total gifts ($589.40) than the national average of $603.86. Northeasterners planned to spend the most, $657.69; Southerners second most, $598.54; and Westerners least, at $567.59.
Midwesterners, however, were more computer-savvy and more likely to shop at discount or specialty stores such as clothing, toy or electronics stores: 48 percent planned to shop online, tied for first with Westerners; 72.8 percent planned to purchase holiday items in discounts stores, above Southerners’ 72.4 percent; and 48.8 percent at specialty stores, above Northeasterners’ 48.6 percent.
Most Midwesterners’ holiday budgets will be allocated to gifts, with the average Midwesterner spending $450.34 on family, $77.38 on friends, $18.13 on coworkers and $43.55 on others such as clergy, teachers, and babysitters.
The UBS/ICSC Holiday Shopping Survey 2006 found that, on average, consumers intend to spend $676 per person - nine percent more this holiday season than last. UBS is a global financial firm, ICSC the International Council of Shopping Centers.
The Purdue Retail Institute and Center for Customer-Driven Quality says consumers will spend 2 to 6 percent more overall than last year, but retailers will see an increase of only 1 percent to 4 percent due to deep discounting, overstocks and excess inventory.
And the 21st Anniversary Holiday Survey of retail spending and trends commissioned by Deloitte & Touche USA LLP, the most bullish survey, estimates overall spending will be up around seven percent.
… and One Nay
In contrast, research commissioned by The Conference Board projects a downturn this season. The survey reports that U.S. households will spend an average of $449 on gifts during the holiday season, down from last year’s estimate of $466. Other key findings in The Conference Board survey: Households headed by individuals 55-64 intend to spend the most this year, with $508 in average expenditures; households headed by those aged 35-44, $478. Households whose incomes top $50,000 will spend the most regardless of age, $631.
Dark Gray Thursday, Cyber
The retail season officially kicked off on Black Friday weekend, which arrived Thanksgiving night in some communities. More than 140 million people hit the stores on Black Friday weekend, where they spent an average of $360.15, up 19 percent from last year’s $302.81, according to the NRF’s 2006 Black Friday Weekend Survey.
A Shop.org survey said 60.7 million consumers planned to shop online from home or at work on Cyber Monday. This day is the first at work after the Thanksgiving holiday – free high-speed internet access! Such shopping is frowned on by employers, but the day’s nonetheless one of the biggest online shopping days of the year. According to industry tracker comScore Networks, Cyber Monday saw a 26% gain in sales from the same day in 2005, to $608 million. This is the single biggest day in e-commerce history.
Amazon.com was the most popular site, scoring just over 12% of the day's retail market share, according to Hitwise, a Web activity tracker. Most other traffic leaders were not pure internet retailers: Wal-Mart (whose sales, incidentally, have so far disappointed), Target, Circuit City, Best Buy and J.C. Penney, all with at least 3% market share.
Deloitte & Touche USA LLP, National Retail Federation, comScore Networks, Hitwise, Shop.org, Purdue Retail Institiute, UBS/ICSC Survey, The Conference Board.