Holiday shopping season sales, which make up the largest part of retail sales all year in the U.S., are expected to decline overall this year.
The current economy has left some families in dire straits, struggling to find funds for necessities like food and clothes. This trend will likely stretch through to the holiday season in the hardest hit parts of our nation, but will appear to fade in others.’
In a study published by CNNmoney.com, the National Retail Federation is expecting a 1 percent decline in sales from last year. That would be a smaller decline in sales than last year’s realized decline of 3.4 percent.
The declines are likely caused by the poor condition of the credit market. Credit cards have long been a traditional method to buy gifts for loved ones while enabling cardholders to pay later. Aside from the already negative stigma carried by credit cards, interest rates and supply of credit are likely to stay level, making the price of credit higher.
Many are expecting another holiday season focused on bargain prices and discounted products. Big-ticket items such as household appliances, and other high priced goods such as jewelry, are expected to have reduced sales due to lack of credit.
The lower level of demand for high priced appliances will likely increase competition between retailers and manufacturers for shares of consumer spending. These situations can be very conducive to aggressive price wars. Declines in sales make shares of consumer dollars even more important to companies that are already expecting lower sales.
Most news of these dismal projections, with the exception of some great bargains, will go unnoticed by the average holiday shopper. If you are reading this and expect to have an easier, more relaxed time shopping this season, think again. Many common retail giants are expecting the bargain seekers to come to them in droves. Retailers such as Wal-Mart, Target, Best Buy and Kohl’s are likely to pass savings to consumers to supplement sales.
Budget constrained families will practice budget constrained shopping. The market for students is likely to be similar. Students lucky enough to have jobs will search for good deals, and will likely target retail shopping at lower prices as opposed to high-end retailers.
Students will also expect less from not only their loved ones, but from their friends too. The tighter budgets will go full circle, amounting to less gift giving.’
As both adults and students reign in their consumer spending, the majority of sales are projected to be from low priced entertainment products like DVDs and Blu-ray discs. Other items like books, food and alcohol are projected to claim a larger percentage of sales than higher priced items.
Rosalind Wells, chief economist for the National Retail Federation, acknowledged a trend toward lower priced goods in an article published by CNNMoney.com.
‘As the global economy continues to recover from the worst economic crisis, Americans will focus primarily on necessities this holiday season,’ Wells said.
Many other economists are projecting similar moves regarding sales trends this holiday season, which will definitely show how most Americans have changed their budgets and consumption habits. The times of spending the holidays in the Bahamas are over for most.’
Although the holiday season will suffer a small decline in sales, the spirit of the holidays will not. Most Americans have had time to realize the effects of the initial punch of the recession, and have made changes to the ways they budget. Some of these Americans have even found new or more work. Studies show gift giving may change its style, but it won’t go away.
