2008 Holiday Sales Outlook
Retail sales during the winter holiday season represent a major indicator of economic activity and consumer sentiment. According to the National Retail Federation, average holiday spending for the weekend following Thanksgiving was up 7.2 percent, driven by aggressive discounts by retailers. Despite the large weekend increase, overall holiday spending is projected to increase by 2.2 percent from last year, with consumers planning to spend an average of $832.36 nationally. Midwestern consumers plan to spend $759.70 for the 2008 holiday season.
Each forecaster uses different methods to predict holiday sales. All of them have predicted a lower increase or decline this year due to the struggling economy and budget conscious consumers. The National Retail Federation (NRF) predicts an increase of 2.2 percent in holiday sales to $470.4 billion. The Deloitte & Touche Annual Holiday Survey forecasts a slightly higher increase at 2.5 to 3.0 percent while the International Council of Shopping Centers (ICSC) forecasts a 2.5 percent increase. The lowest estimate of a 1.0 percent decline was predicted by America’s Research Group. If holiday sales continue as predicted it will be the lowest holiday sales season since 2002 when holiday sales rose by 1.3 percent.
NRF’s Holiday Consumer Intentions and Actions Survey reported that consumers plan to spend an average of $630 nationwide on holiday gifts alone, with Midwesterners averaging $577. The Midwest consumer plans to spend $759.
2008 National Retail Federation Projected Midwest Holiday Spending
Deloitte’s survey shows that consumers plan to spend
less overall during the holidays for gifts but will pad their budget with extra money for non-gift items.
With the holiday specials and discounts, over 56.6 percent of shoppers are planning to make additional non-gift purchases for their families.
More than half of the shoppers indicated that price was the most important factor in determining where to shop for this holiday season. More than 40 percent of shoppers say that sales and promotions will determine where they will shop. Another 12.6 percent indicated everyday low prices are the most important. Other consumers rate selection (21.5%), merchandise quality (13.4%), convenient location (5.6%), and helpful customer service (5.2%) most important.
Black Friday and Saturday, the first two holiday shopping days after Thanksgiving, have been dubbed thus because they represent the days when most retailers traditionally move the bottom line from red (losses) into the black (profit).
According to the NRF’s Black Friday Weekend Survey, Black Friday and Saturday got off to a brisk start with most purchases being driven by retailers' aggressive discounts to lure buyers into their stores. Combined sales for the two days rose 7.2 percent from last year to total $41.0 billion, with 73.6 million people out shopping. Thanksgiving has become important in the holiday shopping season with persons shopping jumping from 10.9 million to 16.2 million, a rise of over 48 percent. The NRF’s Black Friday Weekend Survey, which covers Thursday, Friday, Saturday and Sunday Sales, reported that consumers nationwide spent an average of $347. Of those who shopped on Friday, 23.3 percent were in the stores by 5 AM, and more than half were at stores by 9 AM.
Topping Black Friday weekend purchases were clothing and accessories at 50.9 percent. Shoppers followed with Books, CD and DVD's (39.0%), Electronics (35.9%) and Toys (28.5%). Gift card purchases (18.7%), were down over 21 percent from last year.
2008 Black Friday Weekend Spending
*The sum of the totals may be greater than 100 percent because the respondents can choose more than one answer.
Many retailers are breathing a collective sigh of relief with the higher-than-expected sales for the start of the 2008 holiday shopping season. Other analysts warn that the higher sales may slow as bargain hunters leave the stores as the holiday shopping season continues. The NRF’s Black Friday Weekend Survey shows that 39.3 percent of holiday shoppers have already completed their shopping. At the same time last year, 36.4 percent had completed their holiday purchases.
This year’s Black Friday hot items included the GPS systems, IPOD and MP3 Players, Elmo live toy, Bratz Dolls, Ultimate WALL-E, and for the second year, the Guitar Hero video game.
Cyber Monday, the Monday after Thanksgiving, was predicted to have an increased number of shoppers hunting for bargains online. An estimated 84.6 million Americans were planning to shop online, higher than last year’s 72 million, according to a Shop.org survey conducted by BIGresearch. Retailers were planning to offer daily and hourly specials and promotions to drive customers to their sites. Over 25 percent of online retailers offered free shipping as an incentive. According to Purdue Retail Institute, Internet holiday shopping is expected to increase at least 10 percent from last 2007.
The holiday retail season has 27 shopping days between Black Friday and Christmas Eve, one of the shortest number of spending days, spurring retailers to fight for every holiday dollar this year. The accuracy of the analysts’ predictions will remain to be seen as the holiday season continues.
View the 1999 Actual Spending through the 2008 Holiday Season Spending Forecast prepared by the International Council of Shopping Centers (ICSC) here.
Sources: International Council of Shopping Centers,
National Retail Federation, Deloitte & Touche USA LLP, Purdue Retail Institute, America’s Research Group, Shop.com.