As U.S. consumer confidence cautiously edges upward, The Nielsen Co. predicts consumer holiday spending to closely reflect 2009 spending with flat dollar sales at approximately $89 billion, and flat to declining unit sales, down .15%.
“As we approach the holiday season, consumer confidence is up slightly, but below pre-recession levels,” said James Russo, vice president, Global Consumer Insights for The Nielsen Co. “Consumers are concerned about the jobless recovery and managing their personal finances. As a result, they are closely planning their spending and continue to reduce their shopping trips while placing more emphasis on value. Fewer shopping trips make every retail interaction critical this holiday season and retailers need to turn this increased but restrained optimism into sales.”
• More consumers plan to buy this holiday season, with 36% telling Nielsen they will spend less, compared to 42% in 2009.
• Value retailers will attract shoppers, but online retailers will see the biggest surge. Unlike 2009, consumers express moderate interest in spending more across a broad spectrum of retail channels, such as consumer electronic, pet, liquor, department, convenience/gas, and home improvement stores. Consumers plan to spend less this year in mass merchandiser stores, while plans for spending in supercenters, club, grocery, toy, book and office supply stores remain flat.
• Consumers earning $70K, as well as those earning $100K or more, will drive online store visits. Dollar store visits will be driven by consumers with incomes $50K and less, which is an increasingly higher income shopper than previous years. All income segments will be attracted to mass merchandisers, supercenters and club stores.
• Increases in consumers’ holiday spending is driven by lower income consumers, with 6% of those households earning less than $20K planning to spend more, compared to 4% of higher income households ($100k+) planning to do so.
• Nielsen predicts a strong season for technology products and gift cards, with some possible upside surprises in discretionary items such as apparel, toys, videogames, books and even vacations, especially among upper income households ($100K+).
• Discretionary items such as jewelry and DVDs are forecasted to see a slight uptick, as consumers express a desire to spend more on these items. What’s not? Consumer spending on sporting goods, CDs, cookware, and bed and bath items will be flat.
• Consumers are spending a considerable amount of time in front of the TV during the weeks surrounding the holidays, with the week between Christmas and New Year’s ranked as the top week for overall live television viewing, using a DVD player and playing video games. The week of and the two weeks following Thanksgiving rank among the top 10 weeks for men’s TV viewing, a consideration for retailers to take into account when planning their media buys.
“Consumers’ desire for value continues into this year’s holiday season,” said Russo. “In this new normal however, consumers have redefined value. Value is not about price, it’s about the balance between price and benefits. Retail channels offering a clear value proposition and those that focus on consumers’ desire to plan as they manage personal finances, such as online stores, will do well. More and more, it’s about capitalizing on the interactions with an increasingly savvy-and at times disloyal-consumer. Those value propositions tailored around benefits beyond price will resonate with consumers.”