University survey shows holiday shoppers expect to spend lessby Martin Moylan, Minnesota Public Radio
An annual University of St. Thomas survey suggests Twin Cities residents expect to spend about 12 percent less on holiday shopping this year. Researchers at the university found the average household anticipates spending $663, about $90 less than last year. Retailers are whacking prices and otherwise doing their best to try to change such dire forecasts.
St. Paul, Minn. — The Rosedale Mall was fairly busy yesterday afternoon. Perhaps it had to do with an enticing one-day sale at the Macy's store at the mall. Shoppers are more intent than ever to buy things only when they're on sale these days, especially from more upscale retailers like Macy's.
But Harlene Hagen of Shoreview said no sales or other sweet inducements from retailers are going to get most shoppers to hike their total holiday spending this year.
"I'm suspicious it'll be effective," Hagen said. "Because, I think, the present state of our economy has gotten the consumers' attention on their own pocketbook."
Industry analysts predict the only retailers to do well this holiday season will be those that offer essential goods at low prices. The Wal-Marts, Costcos and Dollar Stores of the retail world. They expect everyone else -- even Target and especially upscale and boutique retailers -- will take painful hits to their sales.
That prediction makes sense to Steve Vennemann of Marine on St. Croix.
"I think people are going to be a little cautious and cut back quite a bit," Vennemann said. "Sales will probably be down at least 25 percent in most stores."
Vennemen said he'll be part of the trend, if not a major part of it.
"We've cut back a little, but not too much just because it's Christmas coming," he said. "So we don't cut back too much on that."
Dennis Rusinko of Minneapolis thinks a lot of people will be cutting back, whether a little or a lot.
"People are going to have to look very seriously at where they want to spend their money," Rusinko said. "They're not going to go out like they used to and spend it on anything they see. It's hard to say how much, But I think they'll spend less."
The University of St. Thomas survey of shoppers found similar pessimism. Fifty-four percent of respondents said they'll spend less on holiday gifts this year, down from 39 percent last year.
Dave Brennan is one of the St. Thomas professors who worked on the survey. Brennan notes some retailers have been cutting prices 30 to 50 percent or more. But people are watching their spending, buying just what they need.
"Most of the people are buying on-sale and basic items rather than splurging on things that are not necessities," Brennan said.
The survey indicates metro-area shoppers will spend about $832 million this holiday season, down from $934 million a year ago.
The 659 people in the St. Thomas survey sample were significantly older and and more female than the Minnesota population overall. The margin of error for a representative sample that size would be about 4 percent.
But, while the precision of the survey may not be right on target, the trend is already clear. People are going to spend less. They know it. And that's what a number of recent surveys and studies point to.
What's a retailer to do?
Dave Heupel said discounts are the way to go.
"And I'm not sure if that'll even help," Heupel said.
Dave Heupel is a retail analyst with Thrivent Financial for Lutherans. Heupel said most retailers are in for a disappointing holiday season, just like their customers are. Financially, that is.
"We're in a consumer recession like we haven't seen in many, many years," Heupel said. "You have a consumer that is very concerned about the economy, the employment environment. The housing market is still a great concern, and that is just not a great recipe. People have just reined it in."
This holiday season, it surely seems that when consumers think about reaching for their wallets, they're not going to be thinking ho-ho-ho, but no-no-no.
- Morning Edition, 11/20/2008, 6:55 a.m.