Nearly four in ten consumers, 38%, say they plan to spend less this holiday season than they did last year, 14% plan to spend more than last year, and 47% plan to spend the same as they did in 2012, according to a new poll from Princeton Survey Research. The results underscore the slippery ride retail stocks are now on.
The results are surprising in two ways: One, because they exactly mirror a similar finding from other polls in 2010 when the economy was really in a slump, and two, because respondents now say their feelings of financial security are at their highest levels since August.
Feelings of job security turned positive for the first time since September, showing the government shutdown had little impact on job security, though it did cast a pall. Sanjit Sengupta, professor and interim chair of marketing at San Francisco State University, noted: "This year, one of the biggest issues was the government stalemate in Washington and how that put a gloom on everybody.”
The problem is flatlining income growth, the results show. Shoppers were tough on retailers during the Thanksgiving weekend, coming out in greater numbers versus last year, but spending 3% less, marking the first decline for a Black Friday weekend since 2009. Retailers may have to deliver deep discounts that will hurt profit margins as they race to make up big holiday sales in coming weeks by slashing prices to dump inventory. Already, big retailers started their Black Friday deals earlier than usual on Thanksgiving Day, with some announcing discounts even in September.
The weather is having an impact as well.
“Colder-than-usual temperatures and snowstorms in many parts of the country may contribute to weaker holiday sales this year,” BankRate Monitor says in a statement. “But some holiday shoppers could choose to chill out, not because of the weather, but because of debt or inadequate savings.”
The research firm also says, “More than a third of consumers say they're less comfortable with their savings than they were a year ago. About one-fifth feel more uneasy about the debt they're carrying, roughly even with the number who feel better about their debt than they did last year at this time.”
The results comes as the New York Times reports consumers are traveling to retail stores armed with increasingly sophisticated price-tracking tools on their smartphones and other devices. Recognizing this new reality, some retailers, desperate for sales and customer loyalty, have begun training their employees in the art of bargaining with customers, the Times reports.
The Princeton poll, commissioned by BankRate Monitor and headlined “Many Feel Grinchy About Holiday Spending,” found that consumers who say they plan to spend less outnumbered those who say they plan to spend more in all age and income groups. Moreover, the disparity increased with age. On top of that, households with income less than $50,000 reported they are the most likely to say they plan to spend less this year.
“Many Americans continue to struggle with little or no savings and stagnant wages, forcing them to rein in their spending this holiday season,” said Greg McBride, CFA, Bankrate.com’s senior financial analyst. “Overall, Americans are feeling more financially secure after the government shutdown and debt ceiling saga were resolved, but many are still clutching their pocketbooks closely.”
Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007 and is the author of Skirting Heresy: The Life and Times of Margery Kempe (Franciscan Media, June 2014).
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.