Almost two-thirds of adults in the US won’t spend more this holiday season despite lower fuel costs, a new Reuters/Ipsos poll shows, in a bad sign for retailers looking for an extra boost in gift buying from cheaper prices at the pump.
The recent slide in fuel prices and signs of economic improvement had raised the possibility of stronger holiday sales.
But the survey of 1,707 adults conducted during November 12-17 found that almost 60 per cent are cautious on spending because of “economic uncertainty”.
Follow-up interviews with poll respondents found concerns about stagnant paychecks, higher food prices, unemployment and underemployment.
“We live on a budget so we have a certain amount for groceries, a certain amount for birthdays, a certain amount for holidays,” said clerical worker Christine Bogolawski, 44, of Cumberland, Rhode Island, the US, who plans to spend about the same as last year and plans to bank what she saves at the pump. “It’s only a few cents per fill up,” she said.
Bogolawski is not alone in prioritising savings. Americans learned to spend less during the recession, and they’re not quitting those habits quickly. The savings rate rose slightly in September, while wages remained almost unchanged, and meat prices jumped in October even as the wholesale gasoline costs fell 5.8 per cent for the month.
Still, the US unemployment rate dropped in October to 5.8 per cent, a six-year low, and the National Retail Federation estimated holiday sales would climb by 4.1 per cent, versus a 3.1 per cent climb last year.
Several retailers including Wal-Mart, Target and Sears Holdings hope to benefit from lower fuel prices, which fell below $3 (€2.41) for the first time since 2010.
We live on a budget so we have a certain amount for groceries, a certain amount for birthdays, a certain amount for holidays
“Fuel prices absolutely help,” John Mulligan, CFO of Target, said on a Wednesday after the company posted a quarterly profit above expectations.
But fuel prices are no guarantee of better sales, he said. “I think there is a lot of cross-current mixed signals for consumers, and we expect them to be very focussed on price as they have been, very focussed on promotions.”
The number of shoppers expecting to spend less this year than last outweighed those who expected to spend more in every category in the poll, except food, which was nearly balanced.
Some 30 per cent expect to spend less on electronics, 37 per cent less on jewellery and about a quarter less on clothes and toys. Almost 20 per cent said they would spend more on clothes, 14 more on electronics and toys, and only seven per cent more on jewellery.
Similar to last year, 10 per cent of consumers plan to shop mostly at department stores such as Macy’s, J.C. Penney, Nordstrom and Kohl’s, but only 24 per cent plan to spend mostly at discount stores, such as Walmart, Target and Kmart, down from 31 per cent at this time last year. This year, 40 per cent expect to use a mixture of stores, compared with 35 per cent last year.
The online poll has a credibility interval, a measure of precision, of plus or minus 2.7 percentage points.
Americans also have learned in recent years to find the best deals on the internet.
“You don’t have to walk into the mall to see who has the best prices,” said Charlie O’Shea, senior retail analyst at Moody’s, which expects holiday sales to be slightly better than last year.
That’s forced stores to not only compete on price but also extend the shopping season in the hopes of getting consumers to shop more often and spread their spending over several paychecks, said analysts.