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Higher-Income Shoppers Expected to Boost Overall Holiday Spending Increase

Higher-Income Shoppers Expected to Boost Overall Holiday Spending Increase

By | 10.10.14
Higher-Income Shoppers Expected to Boost Overall Holiday Spending Increase

Analysts are forecasting a jolly holiday season for retailers this year, with spending expected to reach the highest level in three years. Driving the holiday spending spree that could reach the predicted $616.9 billion are wealthy U.S.shoppers eager to take advantage of an expected round of deep price buts by retailers looking to drive sales.

According to an Oct. 7 story by Reuters’ Nantida Bose, the benchmark National Retail Federation forecast predicted a 4.1 percent increase in holiday sales, surpassing last year’s 3.1 percent increase, and the 3.5 percent growth of 2012.

Ironically, average spending per household is expected to decline to $684 from last year’s $735, according to economists at PricewaterhouseCoopers (PwC).

“While expectations for sales growth are upbeat, it goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions,” NRF President and Chief Executive Matthew Shay told Bose.

The growth in overall sales will be spurred by online shopping, where consumers turn for bargains and convenience, and where the NRF says 41 percent of households are expected to spend 8-11 percent more than last year, to the tune of a projected $105 billion.

Sales will also get a boost from wealthier shoppers, the prime market for smaller local and specialty retailers. Bose noted that PwC expects the country’s wealthier shoppers to bankroll much of the spending increase, while there will be continued holiday belt-tightening in lower income homes.

Steven Barr, Pwc’s retail and consumer practice leader, told Bose, “The spending divide among shoppers is widening, creating two distinct groups that we are tracking – survivalists and selectionists – and retailers must cater to both segments.

Bose noted that Ernst and Young analysis shows increased holiday shopping activity among the haves is good news for small and specialty retail stores. Higher-income shoppers tend to seek out specialty and local retailers, and avoid the big-box holiday experience, she wrote.

“We are likely to see continuing growth for retailers catering to upper-income consumers but at the same time the everyday consumer, the low-income shopper is not feeling a lot of relief and there is a good chance that will get reflected in holiday sales,” Marcie Merriman, Ernst and Young’s executive director of retail strategy and customer engagement, told Bose,

Bose also pointed out that the NRF forecast parallels that of economists at Deloitte, who project November-to-January sales increasing by as much as 4.5 percent from 2013.

Reference:

“Rich shoppers seen boosting U.S. Holidays, deep discounts likely”. Reuters. 10/7/2014.

 

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