Holiday Spending Plans Plummet, Signaling Dismal Retail Season
Over Half Intend to Spend Less This Year Than Last on Holiday Gifts
ANALYSIS by GARY LANGER
Nov. 19, 2008
Americans plan to cut back drastically on holiday spending this year, a dismal prospect for retailers in their most critical season.
Fifty-one percent in this ABC News poll say they'll spend less this year than last on holiday gifts, matching the sharpest consumer retreat in polls dating back 23 years -- last seen ahead of the dreadful Christmas retail performance just after the 1990-91 recession.
More, 68 percent, say they'll wait for sales before buying holiday items, even if that means missing out on things they really want -- 26 points higher than in a 1990 poll. And Americans on average say they'll spend $716 on holiday gifts, the least in polls since 1989 and more than 40 percent below its level three years ago.
The sharp decline in spending plans underscores consumer insecurity in the teeth of the global financial crisis and subsequent recessionary trends. ABC's ongoing Consumer Comfort Index fell this week to its lowest on record in 22 years of weekly polls: Only 7 percent of adults say the national economy is good, just 21 percent call it a good time to spend money and 44 percent rate their own finances positively.
Prospects are no better in cyberspace. Online shopping -- previously, a bright spot -- looks set to level off. While 37 percent say they'll buy gifts over the Internet, that's essentially unchanged from last year. Few Internet shoppers, just two in 10, say they'll do all or most of their holiday spending online, also essentially unchanged. And online shoppers are as likely as their offline counterparts to say they'll spend less this season.
The month-and-a-half ahead is an essential period for retailers, some of whom rack up half their annual sales in the holiday period. But this poll indicates no letup from what's already a raft of grim retail news. In just the past week, the Commerce Department reported a 2.8 percent month-to-month decline in retail sales in October, the largest drop in 55 years of surveys; the International Council of Shopping Centers reported a 0.9 percent decline in same-store retail chain sales from a year earlier, the worst in 35 years; Circuit City filed for bankruptcy; Best Buy reported a 7.6 percent drop in October sales; Macy's reported a $44 million third-quarter loss; and the National Automobile Dealers Association projected a 12 percent drop in new car and truck sales.
CUTBACK -- A mere 8 percent of Americans plan to spend more on holiday gifts, a third of its record high in 1985. Fifty-one percent say they'll spend less, up 15 points from last year. That includes three in 10 (31 percent) who say they'll spend "a lot" less.
Plans to cut spending peak among women -- 57 percent say they'll cut back, vs. 45 percent of men. And in a trouble sign for children's retailers in particular, 56 percent of parents plan to spend less on holiday gifts this year, up 23 points from last year -- one of the sharpest pullbacks in any group.
Moreover, while plans to cut back peak in the middle-income ranges, 46 percent of people with more than $100,000 in household income also plan to spend less -- up very sharply from 26 percent last year. That suggests high-end retailers will not be immune.
In data since 1985, this is only the second year in which anywhere near this number of Americans have said they'd cut their holiday spending. The last was 1991, when fourth-quarter retail sales were flat -- their worst performance in the past generation.
DOLLAR FIGURE -- As noted, Americans on average say they'll spend $716 on holiday gifts, sharply down from an inflation-adjusted $1,228 in a 2005 ABC News poll. The number is less precise than it looks -- it's hard to estimate actual spending in advance -- but it does indicate the extent to which consumers are pulling in their horns.
Spending plans in this measure are down among women (50 percent lower than in 2005), down by 47 percent in $100,000-plus households, and down especially steeply, by 61 percent, among seniors.
SALES -- While majorities across the board say they're likely to wait for items to go on sale, this, too, peaks in some groups -- among women (74 percent are looking for sales, compared with 60 percent of men) and shoppers under age 55. Again, even among well-off shoppers, large numbers are looking for sales -- 73 percent in $100,000-plus households and 80 percent in those with incomes between $50,000 and $100,000.
Not only do 68 percent say it's likely they'll wait for sales (up from 42 percent in 1990), but 43 percent call it "very" likely -- up from 18 percent in that earlier poll.
INTERNET -- Finally, elements of the digital divide remain intact: Use of the Internet for holiday shopping remains to a great degree a thing of age, income, and education.
Among adults under age 35, 52 percent say they'll shop online for holiday gifts. That declines steadily across age groups, bottoming out at just 16 percent of seniors. Shopping online also is far more prevalent among higher-income Americans, falling precipitously among those who are less well off. And it peaks among college graduates vs. those who haven't gone beyond high school.
METHODOLOGY -- This ABC News poll was conducted by telephone Nov. 12-16, 2008, among a random national sample of 1,002 adults. The results have a 3-point error margin. Sampling, data collection and tabulation by TNS of Horsham, Pa.