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Retailers may have a 'cutthroat Christmas'

Many shoppers plan to spend less and seek discounts. Merchants are lowering prices, rolling out holiday items earlier and launching layaway and other programs.

October 20, 2009|Andrea Chang

This holiday season, don't be surprised if your gifts come from discount stores -- or if some of your friends don't buy you anything at all.

Lingering economic worries will cause holiday shoppers to trim budgets and look for more deals this year, according to a National Retail Federation survey to be released today. The survey found that U.S. consumers plan to spend an average of $682.74 on holiday shopping, a 3.2% drop from $705.01 last year.

The findings are in line with recent projections by numerous analysts and retail groups that call for a flat to negative Christmas season as consumers continue to worry about their jobs and finances.

"This holiday season will be a bit of a dance between retailers and shoppers, with each group feeling the other out to understand how things have changed and how they must adapt," said Tracy Mullin, president of the retail group.

Nearly two-thirds of Americans surveyed said the economy would affect their holiday plans. Of those, 84.2% said they would spend less and 55% said they would shop for sales more.

At South Coast Plaza in Costa Mesa recently, Orange Coast College theater student Shawn Greenfield said he slashed his holiday gift budget to $200, down from $500 or more in past years.

"This year I'm going to cut back quite a bit," he said. "I definitely won't buy anything full retail; it has to be on sale."

Many Americans also plan to change their gift-giving habits. Of those who said the economy would affect their holiday plans, 36% said they would buy more practical presents and 16.7% said they would make more gifts themselves.

With consumers reluctant to buy, it could be a "cutthroat Christmas" for retailers, said Richard Giss, a partner in Deloitte & Touche's consumer business division.

"Retailers are going to have to offer a lot of sales to get them in the door," he said.

Merchants are also rolling out holiday items earlier and launching programs to attract frugal shoppers.

On Monday, Toys R Us Inc. began offering layaway on hundreds of items. The program, available in Toys R Us and Babies R Us stores nationwide, lets shoppers choose gifts early and make a series of small payments over an extended period.


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