NEW YORK – Two new studies released this week forecast diminished holiday income for retailers. A survey of 16,000 consumers by Brand Keys, a consultancy focusing on brand and customer loyalty, says 35% of shoppers plan to spend less than they did last year, while research conducted by the consumer information firm NPD Group reveals that more than a quarter of shoppers anticipate spending less this year.
"Consumers will be keeping careful watch on their credit card spending this season," says Marshal Cohen, the NPD Group's chief industry analyst. "I think many will refrain from purchasing an indulgence or splurge gift, and for the first time in years, may actually cut people from their shopping lists."
Unfortunately, the primary victim of reduced spending will be specialty retailers like novelty shops—Brand Keys notes that only two-thirds of surveyed consumers plan to look for holiday gifts there. Instead, more consumers are planning to drop cash online, via catalogs, and in discount stores.
So how can retailers snag a portion of an ever-smaller pie?
— Offer gift cards. With cash in short supply, 15% more of Brand Keys' shoppers plan to purchase them.
— Roll back prices and promote those price cuts: the NPD Group's study indicates that shoppers are influenced by "special sale prices" and an item's perceived overall value.
— Try setting sale prices now. Nearly two-thirds of the surveyed shoppers have already begun bargain-hunting.
But don't let glum holiday prospects get you down—the retail outlook isn't completely sour. The National Retail Federation expects a marginal 1.9% increase in spending, while the International Council of Shopping Centers predicts a 1.7% gain.
Plus, there's always the possibility of keeping customers coming once the gift-shopping season ends. "Don't forget those post-holiday promotions," says Cohen. "The markdowns could almost double the value of a gift card."
