Will American consumers deliver a spicy trove of holiday cheer in the stocking of retailers this upcoming Christmas season—or a lump of coal?
Two widely-watched prognosticators have come up with radically different forecasts as shoppers spread out to stores and hit their favorite e-commerce sites to buy their gifts, as omnichannel shopping increasinbly becomes the norm.
The National Retail Federation forecasts a 4.1 percent increase in holiday spending, about one-third better than the 3.1 percent increase in 2013 over the prior year, and a far sight better than the 2.9 percent average annual increase over the previous decade. This optimism is ratified by a prediction by Deloitte that foresees a gain of 4 to 4.5 percent.
But another consultancy, PwC, just came out with a more pessimistic outlook, which predicts an “average household spend” in the US of $684 this holiday season, down by more than 7 percent from the actual spend of $735 last year.[more]
The huge disparity in the conclusions is understandable, given that the US economy only now seems to be emerging on its strongest recovery footing since the Great Recession and yet other important metrics, including personal income and the percentage of the workforce that is employed, have continued to indicate sluggishness.
These seeming contradictions lead, among other things, to consumer anxiety that will have an impact on holiday spending which isn’t yet clear.
So it depends a bit on whether you see the glass of eggnog as half empty or half full.
For its part, the US retailers’ association optimistically cited improving economic conditions and pent-up consumer demand plus a relative lack of political drama. “The big observation is that consumers are not in the middle of a government shutdown, or facing the same pressures they were last yaer, either from tax increases or horrendous weather,” said Matthew Shay, CEO of the Washington, D.C.-based NRF.
Trouble is, Americans are faced during this period with a contentious campaign in advance of the November elections, and with geopolitical “drama” that includes ISIS and Ebola.
But such concerns weren’t cited as reasons for pessimism by PwC; it zeroed in on more basic economic worries. “Shoppers remain cautious on the economy and are concerned about disposable income, the rising cost of living and insufficient salary,” said Steven Barr, PwC’s US retail and consumer practice leader.
Interestingly, PwC also reported on what it called the emergence of a “bifurcation” of the American holiday shopper into “survivalists” who generally make less than $50,000 and comprise 67 percent of American shoppers, and “selectionists” who make more than that and comprise the other one-third. The former group’s average spend will be $377 this holilday, PwC predicted, and the latter’s $978.
Another big trend PwC sees this holiday season is the dominance of omnichannel shopping. This year “could be the turning point when consumers make online pre-planning an integral part of their holiday-shopping tradition,” the firm said.