Holiday sales will increase by more than 4 percent this year, according to the National Retail Federation. Forecasting total holiday sales of $586.1 billion, the 2012 estimate is higher than the 10-year average holiday sales increase of 3.5 percent, although 2011 sales grew by 5.6 percent.
“This is the most optimistic forecast NRF has released since the recession,” said NRF President and CEO Matthew Shay. “In spite of the uncertainties that exist in our economy and among consumers, we believe we’ll see solid holiday sales growth this year. Variables including an upcoming presidential election, confusion surrounding the ‘fiscal cliff’ and concern relating to future economic growth could all combine to affect consumers’ spending plans, but overall we are optimistic that retailers promotions will hit the right chord with holiday shoppers.”
Although government data such as minimal jobs and income growth, as well as a stagnant unemployment rate, could deter holiday shoppers, increases in home prices and the overall consumer confidence index shine a ray of hope that retailers for retailers to grab hold.
“While moderate compared to what we experienced the last two holiday seasons, the forecast is a very pragmatic look at what to expect this year given the current rate of economic growth,” said NRF Chief Economist Jack Kleinhenz. “There’s still some general anxiety amongst consumers when it comes to how the state of the economy is impacting their spending plans, but retailers can expect to see excitement around their promotions and plenty of bargain hunters both online and in stores in the coming months.”
Consumer studies tend to support the NRF prediction. According to consulting firm Accenture’s annual consumer holiday shopping study, consumers plan to spend an average of $582 on holiday shopping this year, and 23 percent of respondents said they intend to spend more than $750. More than half of those surveyed plan to increase their 2012 holiday shopping by at least $250 over last year’s budget.
“The U.S. consumer refuses to be counted out and is entering this holiday season better prepared and more willing to open his or her wallet,” said Chris Donnelly, managing director of Accenture’s Retail practice. “Self-sacrificing will be down and spending will be slightly up, however, our research also shows that shoppers will remain disciplined in their spending.”
Likewise, a survey conducted by USAA Bank found 53 percent of Americans plan to buy more gifts this year than last year. Plus, only 24 percent of holiday shoppers surveyed plan to follow a budget this year, compared to 31 percent in 2011 and 40 percent in 2010.
“In addition to the decrease in the number of shoppers cutting spending and budgeting, nearly half plan to use their credit cards to make holiday purchases,” said JJ Montanaro, a USAA certified financial planner. “With only one-third planning on paying their holiday credit card balances in full immediately, it appears shoppers will be less cautious with their holiday spending.”
Online shopping site Pricegrabber surveyed 2,235 shoppers and found consumers will be increasing their holiday purchases for a variety of reasons. Forty-two percent of those surveyed are upping their holiday budget because they are making more money this year, while 34 percent said items are priced better this year than last year. Another 22 percent said their increased confidence in the economy led to their decision to spend more this holiday season, while 13 percent attributed their increased spending to higher credit limits. Eight percent of holiday shoppers surveyed said they are simply fed up with remaining frugal during the season.
“We’ve seen this pattern of cautious optimism all year and despite the challenges that still exist in our economy, it looks as if consumers are eager to celebrate with friends and family,” Shay said.
