A Weary Holiday Consumer
ShopperTrak on Wednesday trimmed its holiday forecast, saying the selling period would have "a different tone" in the wake of three shocks — the school shootings in Connecticut, Hurricane Sandy and the impasse over the fiscal cliff.
"It’s a change in mind-set," Bill Martin, founder of ShopperTrak, which tracks mall traffic, told CBS Marketwatch. "Gifts may not be as important as spending time with family. This holiday season is just not going to be as robust."
ShopperTrak made its reassessment after it found traffic and sales were surprisingly down in the week ended Dec. 8.
While a fiscal cliff showdown seems to have been widely expected by economists, retail analysts and political pundits, Mike Duke, Walmart’s CEO, speaking early last week at a Council on Foreign Relations event in New York, said that only 25 percent of its core U.S. shoppers knew what the term "fiscal cliff" meant a week before November’s presidential election, based on internal polling by the chain.
"One week after the election it was up to 75 percent," said Mr. Duke, according to Daily Finance. He added that 15 percent of those customers indicated that the debate in Washington would affect what they spend for Christmas.
In early December, The Thomson Reuters/University of Michigan’s preliminary reading of its index of consumer sentiment plunged to 74.5, from 82.7 in November and its lowest level since August. Many reports blamed the fiscal cliff headlines.
Other reports also noted a slowdown in spending since Black Friday hysteria, possibly due to two extra days this holiday season between Thanksgiving and Christmas. But most also cited fiscal cliff concerns.
"The lull is a bit more pronounced," Andrew Lipsman, VP for industry analysis at ComScore, told St. Louis Today last week. "We’re not sure if that reflects a dip in the consumer confidence index or just the way the calendar falls."
While emotions following the shootings in Connecticut are still raw, Sandy doesn’t appear to be affecting the overall country’s spending mood given Black Friday’s strength. But apparel discounts as large as 50 percent are indicating that some chains have failed to recoup sales lost due to shuttered stores in late October and early November.
The apparent shortfall is said to be putting more pressure than recent years on the final 10 days leading up to Christmas, which account for nearly 24 percent of the holiday season’s total, according to SpendingPulse.
"Super Saturday — the last Saturday before Christmas — is going to have to live up to its name," Michael McNamara, global solutions leader at MasterCard SpendingPulse, told the New York Post.
- ShopperTrak Lowers Holiday Sales Forecast – ShopperTrak
- ShopperTrak Lowers Holiday Sales Forecast – CBS Marketwatch
- Hurricane Sandy to Affect Holiday Sales Only Slightly, and to the Positive – Chain Store Age
- Superstorm Sandy blasts holiday sales season for Sheepshead Bay shops – New York Daily News
- A Christmas peril: Holiday sales lagging – New York Post
- Fiscal cliff hovers over end of holiday shopping season – St. Louis Today
BrainTrust
Discussion Questions
How would you gauge the shopper’s mood in the final days of the holiday shopping season? Are concerns over the fiscal cliff or recent tragedies weighing on shoppers’ minds? Should marketing approaches be tweaked for the final days of holiday shopping?
I knew the rosy predictions would have to be clipped at some point. As they are every year, as I write every year. There’s always an excuse, there’s always a threat.
Certainly these are factors, but I’ve seen an awful lot of full parking lots and shopping bags in the past few days. The biggest thing you can do is make your store jolly, or fun or heck—just staffed. I was at both Saks and Neiman last night in Vegas. Other than cosmetics, clerks were hard to find. Yet at Apple was rockin’ there with a sea of red shirts helping people with a smile. You want to end the year on a high note; do whatever you can to make shopping fun and you’re getting the bodies.
It’s a shame that the mainstream media, by not reporting on the fiscal cliff until the day after the election, was able to manipulate behavior. The fact that only 25% of viewers had heard the term “fiscal cliff” before the election is very disturbing. FOX was reporting it for months before the election.
The fact is that everyone’s tax bill goes up after the new year. Even if the current tax rate stays the same, everyone’s taxes will still go up due to Obamacare. People won’t spend with this looming bill. The fact that anyone in the media or business world would not see this coming is surprising.
Consumers are only going to spend so much in a given period or season. The amount they spend for the holiday season will go up or down roughly in line with overall spending patterns for the year. We were never going to have more than a small percentage gain in holiday sales this year. We simply shifted it forward with Black Friday and Gray Thursday and next year we will probably add Wicked Wednesday or some such nonsense. But the total amount is what it is.
Every area of the country is different. In my area, people are broke, and are watching every dime. You must have the deals to get a response, so we are keeping prices as low as possible, and pumping up the catering side for profits.
Either way, many of my friends in the supermarket business are very concerned about 2013 and beyond. Might as well enjoy Christmas this year, and deal with whatever happens next year.
In the wake of so much turmoil, bread-winners want to show their families how much they care…and some of that will be in the form of gift-giving. Carpe Diem.
A lagging economy, impending tax increases and a social system that produces someone capable of mass murdering children is going to have an impact on holiday consumerism. That said we have been living under these conditions for some time now and sales forecasts should already reflect them.
In order to have the chance for good holiday sales, it is necessary to say that holiday sales are going to be strong; it is important that consumers believe that. It is not uncommon, however, for the reality of sales to fall short of the hyperbole.
Shoppers have taken a pause to reflect on the recent tragedies. Will that deter them from shopping for the holidays? I’ve asked a number of people, and that doesn’t seem to be the case. However, some are more thoughtful and meaningful with their gifting.
Retailers need to be sensitive to how they market in the wake of tragedy.
I am sure there has been an impact on the holiday mood with the recent tragedies and the fiscal cliff on peoples’ minds. Retailers, particularly those in the affected areas of the country, would be wise to be sensitive to local shoppers. It would be a good idea to focus charitable efforts in NY, NJ and CT right now.
Regarding the fiscal cliff specifically, the politicians are not helping our economy by speaking publicly, because the stock market seems to decline every time.
I actually believe the consumer, whether in the US, or around the world, is a very resilient consumer. I see huge activity at the local malls here in Los Angeles, and I think the shopper is focused upon shopping, and not all the bad events in the news. “When you’re feeling down, GO SHOPPING!”
Perhaps the recent days’ tragedies will have an impact on some families, but the majority of consumers will not stop their holiday shopping because of it. If our retail shopping numbers are down, it is because of a poor Christmas shopping effort, not the weather.
The customer got everything they wanted earlier and they are now attending to family parties and events.
I shop year-round and was done in October. Everything was under the tree Thanksgiving weekend. People don’t over-buy like they used to and now have more events and get-togethers to show they care!
Just like five o’clock, there’s always bad news somewhere; and we didn’t feel Sandy much out here in California (nor did they in Houston, Chicago or—even—Pittsburgh). The fact that a forecast is being changed—or more particularly that these “known unknowns” are being blamed—says more about the pointlessness of these type of predictions than it does about whether/not we should call this season good or bad. It’s a poor craftsman who blames his tools…or in this case, the weather (literally).
Increasingly over the last few years, a pattern has emerged where consumers spend vigorously on Black Friday and then stay home and wait for the retailers to get desperate and lower prices. Just from observation, this season seems much more pronounced than in the past. Given the elements listed in the article, it’s hard to find something to feel optimistic about, which is a key element in Holiday spending.
The Grinch may win this one.
I agree with Bob Phibbs and have also shared similar sentiments in the past. The early season predictions of record sales expectations and, early on, exuberance in early results coming out of Black Friday inevitably lead to lowered expectations and the “excuse du jour” as end of season sales reporting nears.
Both are self serving attempts to instill confidence early and then lower expectations later in investors and analysts.
Twas the week before Christmas, when all through the house.
Jim Cramer suggested that our hopes not get doused.
The XRT ETF gave no hints to despair
As Santa’s reindeer prepared to take air
Anyway…this year is great from a calendar point of view and the weather has been okay—the extra weekend has confused predictions and delayed some purchases—and then of course there is the pending apocalypse..happy Xmas….
I believe that we are now seeing a fragmented consumer population; more affluent consumers are spending and not very concerned whereas moderate consumers are more concerned about the fact that they are underemployed or NOT employed AND living in fear of potential negative fall-out upon them by the fiscal cliff potential bad effects.
Many small business people also are likely being negatively affected simply by the fiscal cliff uncertainty and all of this is affecting spending as well as leading some consumers to wait and hope for late deep discounting (to move merchandise) to allow them to obtain more “value” for their limited dollars. The more affluent and less-concerned are likely NOT offset by simple numbers in relation to the moderate and lower level consumers who are worried.