Ron Kurtz, president of American Affluence Research Centre, believes that confusing holiday season spending estimates may disappoint U.S. retailers
Bulgari Christmas lights on 5th Avenue, New York
Various research firms and organizations have made forecasts of holiday sales growing by 3% or more over 2011 sales. With holiday sales accounting for up to 40 percent of yearly sales volume (National Retail Federation) and 25 percent of annual retail profits (International Council of Shopping Centres), there is evidence that retailers (75% of which expect a sales increase per the Hay Group) may be disappointed by actual sales results.
The different methodologies and assumptions used to develop the sales forecasts make it difficult to find a consensus on what may actually happen, somewhat like the political polls just prior to the election. The affluent consumers may be the most likely to disappoint the retailers, as they are the big spenders and those least likely to use credit and debt to finance gift purchases. The consequences of Hurricane Sandy in the northeast are also likely to reduce total spending.
“ The consequences of Hurricane Sandy in the northeast are also likely to reduce total spending ”
Spectrem’s Millionaire Corner reports that only 66% of investors and 83% of CEOs among the affluent plan to give a gift to their spouse. In total, about 70% of the affluent surveyed by Spectrem say they will spend the same on holiday gifts as in 2011, while 15% say they will spend less and 14% say they will spend more.
The Affluent Market Tracking Study #22, the latest in a series of twice yearly surveys of the wealthiest 10% of U.S. households by the American Affluence Research Centre, also reports that 71% of those surveyed say they will spend the same on holiday gifts as in 2011, but 23% say they will spend less and only 6% say they will spend more. Understandably, those with a more positive outlook about the economy and their personal financial situation are most likely to have the strongest spending plans.
Research for American Express by the Harrison Group suggests the wealthiest 10% will increase holiday gift spending by 22% while all others will spend about 11% less. This indicates a decline in total gift sales of 7.2% but some reports about the research include an estimate of a decline of only 3.4% in total sales.
“ 66% of investors and 83% of CEOs among the affluent plan to give a gift to their spouse ”
Research for the National Retail Federation by BIGresearch suggests an overall increase of 4.1% in total holiday sales. However, the portion represented by gift purchases is forecast to increase by only about 1% to $549. This is about a quarter of the average gift purchases of the affluent estimated by Spectrem and the American Affluence Research Centre.
Final sales results will be largely determined by the actions of the wealthiest 10% of U.S. households, based on net worth. These 11.4 million households represent almost half of total consumer spending.
Their mood and spending plans are often influenced by changes in the stock market, which was moving in the wrong direction sin the week following the presidential election. Unity Marketing, prior to the election, forecast a 4% to 5% increase in holiday sales if Romney won and a 2% to 3% increase if Obama won.
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