Retailers are getting ready to kick off another holiday season, but it may not be looking as merry and bright as retailers would like at this point. After asking U.S. adults how much they expect to spend this holiday season compared to last, holiday spending plans aren’t looking too promising.
From the more than 2,500 consumers we asked in late September to mid-October 2015, 13% plan to spend more this year while more than double that (28%) plan to spend less this year than the previous year. 45% of adult consumers plan to spend the same amount and 15% don’t plan on doing any holiday shopping this year. (We will pay attention to how this changes, if at all, as the holidays near.)
Let’s discover who will spend more and less this season compared to last.
The consumer who will be spending more this holiday season than last is more likely to be a Millennial with a lower than average income. Due to their age, there is a higher likelihood they recently began receiving a salary or their household income is increasing, which could attribute to their higher spending intent.
This report instead will focus on those consumers who so far say they plan to spend less this year than last year, so that retailers can better strategize and market using this intelligence:
Reduced spenders are more than 2X as likely to consider themselves a tightwad (they have a difficult time spending money). So while they are generally more conservative in their spend, something about this year is making them tighten up even more. Perhaps it’s due to these additional attributes:
- They are 54% more likely to believe it is a bad time to make major purchases given the current state of the economy.
- They are also 50% more likely to say their personal financial situation will get worse over the next 6 months.
- They are 42% more likely to say they manage their money poorly.
It seems from these insights that this group of tight spenders are currently dealing with a very pessimistic view of their own financial situation.
- Those intending to spend less are 21% more likely to plan on doing 25%-75% of their holiday shopping online.
- They are 33% more likely to always seek out online reviews before making purchases.
- And they are slightly more likely (+13%) to be very likely to tell friends/family about a product they are happy with.
- They are 55% more likely to very closely follow Major League Baseball, which suggests an interesting advertising avenue for retailers.
- They are 36% more likely to have children in college, and given the expense of college, this may be putting additional strain on them financially.
- Those who plan to spend less are 21% more likely to regularly watch full TV shows online, so retailers may want to increase online ad spend in these areas.
So what did we learn about those who plan to spend less this year? They are likely to be middle aged or older women, who are more likely to have children in college. Reduced spenders are also more likely to have a negative outlook on their personal financial situation and believe it’s a bad time to make a major purchase.
But it may not be all bad news for retailers. The CivicScience and Hamilton Place Strategies Economic Sentiment Index (ESI), which is produced every two weeks and shows overall confidence in the economy, is slightly higher today than it was a year ago:
On October 6, 2015 the ESI was 48, compared to October 7, 2014 when the ESI was 47.5. And confidence in making a major purchase is up notably from last year (50.2 in 2015 vs. 46.9 in 2014).
Economic confidence may play an important role in influencing consumer intentions. If we continue to see consumer confidence gains over the coming weeks, we may see spending plans move in a more positive direction, especially since many of the reduced spenders’ differentiating attributes are based on their personal finances and economic outlook.