Surprisingly Bright Outlook for Holiday Shopping

October 6, 2005 12:01am by

Here’s a pleasant surprise: The NPD Group is predicting that Holiday spending will rise this year — despite all the obvious pressures. Based upon a survey of over 2100 consumers, here are the key points they determined:

• Holiday shoppers will spend $681 this season, compared with
$655 last year (Prediction: NPD Group);
• About 1 in 4 consumers surveyed said rising gas and oil prices
would have a significant impact on their holiday spending;
• 37 percent of respondents plan to buy goods online, according to
the study;
• 67 percent who said they plant to go to
discount stores such as Target and Wal-Mart Stores;
• Leading purchases will be (in order): clothing,
toys, DVD movies, consumer electronics, and
books.

Other key influences that will affect where and how consumers shop:

51 percent of consumers say they comparison-shop before they buy a gift
48 percent prefer to buy special gifts the recipients wouldn’t buy themselves
43 percent use ads and circulars to guide their gift shopping
37 percent think it is nicer to give a gift than a gift card or gift certificate
32 percent plan to buy their holiday gifts on sale
27 percent say they will pay more for the perfect gift

NPD also said that this holiday season is expected to be notable as
"the year of giving to those in need." Shoppers will be more inclined
to give to the needy or buy products for which the proceeds will go to
charity, the research firm said.

Sources:
DESPITE OBSTACLES, CONSUMERS WILL STILL SPEND THIS HOLIDAY SEASON SAYS NPD SURVEY
PORT WASHINGTON, NEW YORK, October 5, 2005
http://www.npd.com/dynamic/releases/press_051005.html

Study: Holiday sales set to jingle
By CNET News.com Staff, Wed Oct 05 14:34:00 PDT 2005
http://beta.news.com.com/Study+Holiday+sales+set+to+jingle/2100-1030_3-5889509.html

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What's been said:

Discussions found on the web:
  1. spencer commented on Oct 6

    This is about a 4% gain vs 5% to 5.5% December to December gains in GAFO sales over the last couple of years.

    Interestingly, I saw a 5% x-mas forecast reported as a disappoining number the other day.

  3. Barry Ritholtz commented on Oct 6

    Spencer,

    Good input

    I didn’t say it was going to be great — just brighter than I had previously thought , given Oil, natural gas, and the end of the Cash Out Refi / Home Equity ATM

  4. Brandon commented on Oct 6

    … but given the situations you’ve discussed many times Barry, I’m not sure if this increased holiday spending should really be considered a positive in a slightly more macro perspective.

    Is it just digging the American consumer’s potential hole a little bit deeper? I’m currently thinking it’s like in your recent Polling Homeowners entry where many are spending under the assumption things will be rosier going forward than they might actually be.

  5. Null commented on Oct 6

    1) those consumers haven’t got their new credit card bill with the new minimum payment calculation

    2) they haven’t seen their winter heating bill. and since the MSM doesn’t really see the NG problem in it’s fullness, the temporarily low (yes, I said low) price of NG is not encouraging enough demand destruction

    3) maybe those consumers are so optimistic because they just intend to max out the credit card before they declare BK? oops, they won’t be able to do that anymore, will they?

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