US holiday gift spending predicted to fall dramatically this season
The latest consumer trends research from the global research firm Illuminas has confirmed retailer concerns about declining US consumer spending, most likely as a result of the national and global economy, extraordinary stock market volatility and rising unemployment. The results suggest that retailers should be prepared for a more frugal holiday season, with almost half of all US consumers (47%) saying they are planning to spend less on holiday gifts compared to last year. Illuminas conducted the research among 1,000 adults in the USA in October 2008*. The Illuminas study also revealed that consumers will be looking for greener options in more ways than one. Four in ten agree they will be buying more gifts with cash this year, while one-quarter say they are trying harder to give gifts that are environmentally friendly. Overall, consumers are taking a more cautious approach to their holiday gift spending by not only using cash more frequently, but a quarter (22%) are also looking for layaway plans, suggesting a desire for non-credit purchasing options. As Robert Takacs, Illuminas NY Managing Director and author of the study points out, “The more successful retailers will be those who can adapt to this new consumer purchasing paradigm.” The spending slowdown is driven not only by current events but also by fears about the future. A majority (54%) agree that they will be spending less on holiday gifts this year because they have smaller budgets, while almost one-quarter(23%) are cutting back because they are concerned about losing their job. Not all is lost. On a positive note, the top two product categories consumers plan to spend the most money on are clothing & accessories and gift cards for practical items including groceries and gasoline, with roughly half of consumers naming these items. Other top items include media products such as CDs and DVDs (44%) and toys and electronics, such as computers, TVs and MP3 players (both at 37%).