With Thanksgiving behind us and the holiday season in full swing, it’s time for the pundits to start guessing whether overall holiday spending will be lavish or more measured given recent difficulties in the mortgage and housing markets. Recent research from Deloitte in the UK suggests that consumers are going to still spend, especially on luxury goods, but may pay for it (metaphorically and actually) in the new year. According to this FT report, in a survey of 1000 adults in the UK, Deloitte found:
- Consumers intend to spend 7% more this year on Christmas gifts, socializing and food and drink than last year.
- 19% of consumers intend to purchase a designer handbag or shoes.
- Price is a less important consideration for shoppers; only 20% of consumers listed price as a main reason for choosing a particular store (it was 37% in 2005 and 23% in 2006); âvalue for moneyâ also declined.
- 62% of shoppers choose a store based on âconvenienceâ (from 50% in 2005)
Deloitte says this is evidence of our so-called âcash rich, time poorâ society, and I have to agree.
But back in the US, willingness to spend might not be as great. Despite reports of decent Black Friday earnings, this week NPR reported that the Consumer Confidence Index dropped to 87.3, down from 95.2 in October and the lowest since October 2005 (following Hurricane Katrina and rising gas and oil prices).
Rosalind Wells, chief economist for the National Retail Foundation, said:
With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending.
Even with the credit crunch, I’m not so sure people will actually be more prudent—if they have a line of credit they’ll use it to purchase expensive gifts they don’t see as optional.
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