U.S. Consumers Curtail 2008 Holiday Spending
Nielsen is forecasting sales of more than $98 billion for the November-December 2008 holiday retail season. But amid worsening economic conditions, U.S. consumers are likely to be more cautious than ever with their spending.
A recent Nielsen survey of 21,000 U.S. households found that 35% plan to spend less this year than they did in 2007. Just 6% will spend more this year, while 50% say they’ll maintain the same level of spending from 2007.
Lower-income households reported large reductions in their holiday spending — but so did high income households. In all, 37% of lower-income households are expected to cut back on holiday spending, as will 34% of higher income households.
What’s Hot?
Necessities — rather than novelties and luxuries — are expected to drive holiday sales this year, according to Nielsen’s research.
Toiletries, baby care products, food items, and gift cards for groceries, gasoline, telephone, and car maintenance are expected to see strong sales.
Practical, cold-weather apparel — socks, fleece jackets, and undergarments — and household goods, like cook books, bed/bath linens, and kitchen supplies are also expected to sell well in November and December.
Among more affluent consumers, fireplace accessories, kitchen ware, family games, and other at-home entertainments will dominate sales.
As in past years, DVDs, video games, mobile phones, books, and wines and spirits are also expected to generate a fair share of holiday sales.
Although many consumers are curtailing their spending on out-of-home food, alcohol, and entertainment, sales of movie tickets, which remain an affordable luxury, are expected to stay strong in November and December.
What’s Not?Department stores and retailers of electronics, toys, home improvement supplies, and office supplies are likely to feel the brunt of the economic slowdown as consumers shift their purchases to more value-oriented retailers.
Where’s the Action?Online retailers, dollar stores, grocery stores, supercenters, mass merchandisers, and club stores are expected to attract the lion’s share of holiday spending, as consumers seek to minimize the number of shopping trips they make — and find good values.
View in depth Nielsen data on consumer holiday spending projections.
Read Nielsen’s holiday sales forecast.
Go behind the numbers: read NielsenWire’s Q&A with James Russo, co-author of Nielsen’s holiday retail forecast.
Read coverage of Nielsen’s findings in Adweek, Media Post, Promo, and the Rocky Mountain News.
Submit questions about the report to Nielsen forecast co-authors, James Russo and Todd Hale, by commenting below.
October 11th, 2008 at 7:46 pm
I’m skeptical. The decline in world markets will take days or weeks for people to absorb. My prediction? By early November, 75% of households will plan to spend less.
October 11th, 2008 at 10:49 pm
[...] expectations in September 2008. For learn more about Nielsen’s Holiday Retail Forecast, visit the Nielsen Newswire Categories : Internet Retail [...]
October 13th, 2008 at 4:01 pm
You talk about Staying In is the New Going Out - do you expect home entertaining to increase?
October 13th, 2008 at 9:57 pm
I agree with John. It isn’t only going to be a decline in world markets but income taxes are going to come due. Property taxes. School taxes. The heating season is about to start. All this money has to come from somewhere. So there is going to be less for the holidays. I find it hard to believe that people are going to “splurge” or even keep the same spending rate as last year. I’ve cut out spending on this holiday altogether.
October 14th, 2008 at 1:39 am
This is just what the technology and innovation needs: a down-turning economy that will keep it from growing.
October 14th, 2008 at 9:33 am
Kathi-
Great question.
Results from a June 2008 Nielsen survey on gas price impact shows the number one way consumers are dealing with high gas prices is by combining errands and trips (78% of U.S. households making this claim — up 10 percentage points from a year ago).
More than half of consumers are also eating out less (52% — up 14 points from a year ago) and staying home more often (51% — up 12 points from year ago).
Our 2008 holiday spending forecast shows 29% of those who entertain at-home during the holidays will be spending less. We de expect at-home entertaining will increase in terms of occasions, but we will likely see a decline in larger or extravagant at-home entertaining — which may be an issue for some product categories, but not for others.
Our advice to marketers: drill down into your category brand buyers and retailer shoppers to understand how an economic downturn will impact the consumers and shoppers that matter most.
-James Russo and Todd Hale, Nielsen
October 14th, 2008 at 2:22 pm
John and Teltech54-
These are valid points you both make.
During the second quarter of this year, 85% of U.S consumers told Nielsen they believed a recession had already begun – perhaps as a result, 35% reported they planned to spend less on holiday shopping this year.
But since our holiday spending survey was conducted in early September, economic conditions have deteriorated significantly — with several major bank collapses or near-collapses worldwide. Given that, we expect that if we had conducted our survey again in early October, consumer response for “less holiday spending” would have been higher than what we reported from our early September survey results.
Incidentally, Nielsen will be releasing our “Global Consumer Confidence Survey” next week, which was fielded during the turbulent economic events of late September and early October. This data will give us the most current read on consumers’ perceptions of the current economic conditions — and we’ll be reporting those findings right here on NielsenWire.
For the time being, one thing is certain — those selling discretionary items will have to work much harder to capture spending this season.
-James Russo and Todd Hale, Nielsen
October 25th, 2008 at 3:08 pm
[...] to bring the larger projects in-house, or because their budgets are getting cut as a result of reduced consumer spending. Everyone seems to be fairly certain that things are going to get worse before they get better, and [...]
October 27th, 2008 at 7:03 am
[...] 35% plan to spend less, 6% will spend more this year, 50% the same. Nielsen, October 2008 [...]
October 28th, 2008 at 9:29 pm
[...] Nielson reports 35% plan to spend less, 6% more, and 50% the same this year [...]
October 31st, 2008 at 8:53 am
[...] Nielson reports 35% plan to spend less, 6% more, and 50% the same this year [...]
November 18th, 2008 at 4:42 pm
[...] 35% plan to spend less, 6% will spend more this year, 50% the same. Nielsen, October 2008 [...]
November 19th, 2008 at 8:43 pm
[...] Scary huh? Tough too because there only reporting up to and including October. We all know what’s continuing to happen day in and day out on Wall Street and if Wall Street is any sort of indicator (I know some people out there still don’t believe it is) E-Commerce sites are in for one painful holiday spending season. With the holidays around the corner historically the purchases go through the roof and then die down. Here’s hoping for a huge holiday season for those in the space. Unfortunately analyst’s don’t share my optimism. I’ll let Nielsen take over from here. [...]
November 20th, 2008 at 4:17 pm
[...] with a value-mindset, consumers are also shifting their gift giving. Neilsen reports that consumers are making practical decisions this year: gifts of necessity rather than indulgence. For [...]
November 26th, 2008 at 12:19 pm
[...] Nielsen forecasts holiday sales of $98 billion, but its survey found that 35 percent of respondents plan to spend less this year [...]