Despite consumer concerns, holiday spending should be up slightly
Nielsen surveys suggest a modest uptick in total dollars spent.
Santa will have a mixed, albeit slightly larger, bag of goodies for everyone this year. That’s according to both Nielsen’s 2014 Holiday Retail Sales Forecast and Nielsen’s Q3 Global Consumer Confidence Report.
Although U.S. consumer confidence is trending upward, nearly 70 percent of consumers polled in Nielsen’s Consumer Confidence Report believe we are still in a recession.
Despite that belief, Nielsen’s 2014 Holiday Retail Sales Forecast found that spending levels were projected to top 2013 by 1.9 percent. Candy purchases, however, are projected to remain flat.
Recent volatility in all three stock markets is undoubtedly having an effect on consumer perceptions of an ongoing recession. Consider that all three major stock market indexes — Dow, Nasdaq and S&P — are toggling between gains and losses (YTD as of 10/20: Dow - 1%, Nasdaq +3% and S&P is +2.5%) after coming off strong gains in 2013.
Nonetheless, there are many positives: Gas prices are down, corporate earnings are up and housing, jobs, equity and inflation are all pointing in a favourable direction for holiday spending. In fact, the Q3 Nielsen Global Consumer Confidence Report, which surveyed 30,000 people in 60 countries, found that:
- All U.S. consumer confidence indicators increased in the third quarter, reaching levels not reported since a pre-recession 2007.
- U.S. job prospects increased 9 percentage points from Q2 to 55%.
- U.S. personal finances increased 2 percentage points from Q2 to 66%.
- The portion of American respondents who believe now is a good time to buy increased 2 percentage points to 51%, compared to the second quarter.
Nielsen’s 2014 Holiday Retail Sales Forecast, which surveyed more than 25,000 demographically representative American households polled in September, investigated 92 categories in five major segments representing more than $100 billion in sales. Regardless of the recent stock market volatility, this report found that spending levels will nudge upward by nearly two percent.
Who Will Buy
- Good news for retailers: 25 percent of respondents had already started holiday shopping in September.
- Women seem to be leading the early shopping trend. Twenty-seven percent of female survey respondents versus 12 percent of males already started holiday shopping this year.
- Out of those who already started holiday shopping, 30 percent have five or more household family members and 32 percent have kids under age 12.
- Multicultural households, that is African Americans, Asian Americans and Hispanic consumers, are drivers of those spending more.
What Will We Buy
- Twelve percent of respondents plan to spend more on gift cards this year than last year, 10 percent plan to spend more on tech gifts, 10 percent plan to spend more on toys and 9 percent plan to spend more on apparel.
- Within food, candy sales, which comprise 9 percent of food dollars, are expected to be relatively flat, with unit declines offsetting price increases.
- Cheese and snacks, however, which comprise 18 percent of food dollars, are expected to experience strong dollar growth. Snack dollar growth will be primarily driven by higher units.
Where Will We Buy
- Online, toy stores and electronic stores could all see a lift this season.
- Millennials (17 percent) plan to spend more online than Gen X (15 percent), Boomers (12 percent) and Greatest Generation (7 percent).
- Nineteen percent of respondents plan to spend more online, 10 percent plan to spend more at mass merchandisers and 9 percent plan to spend more at toy stores this year.