'Tis the Season to Budget

Holiday shoppers expected to think twice before buying.

by Auctiva.com staff writer
- Oct 01, 2009

While experts can't agree on whether holiday sales will be up or down this year, one thing seems certain: Shoppers will be keeping tight fists on their pocketbooks.

According to the International Council of Shopping Centers, a global trade association, sales could increase about 1 percent from November to December. American's Research Group, a consumer behavior survey company, says sales could fall a minimum of 3.5 percent.

"What we'll see this holiday season is more self-imposed spending limits," says James Van Dyke, president and founder of Javelin Strategy & Research. "This won't be a shopping season in which people are feeling exuberant, confidant and willing to shop, but being held back by their credit limits. People will be cautious and curtailing spending on their own."

In fact, eight out of 10 people have begun a budgeting system to reduce their spending, Javelin Strategy & Research found in recently survey. Credit limits and unemployment rates have made shoppers cautious. And though consumers are more confident in the economy than they have been in the past, they want to save, news reports say.

"One might imagine that it would take a miracle on 34th Street—and Main Street—for retailers to have a successful 2009 holiday season," ICSC notes.

"There's a demand effect happening now," adds Laura Nishikawa, an analyst with RiskMetrics Group. "With the combination of less availability of credit and these changes in consumer behavior, I think we'll see less Christmas [being] charged on credit cards."

Shoppers on eBay are already changing their shopping habits, reports eBay CEO John Donahoe. More buyers are paying for purchases directly with credit and debit cards than funding their PayPal accounts to buy items.

"It just gives them a feeling of more financial responsibility and control," he notes.

Shoppers 'spooked'

Shoppers aren't expected to open their wallets much during Halloween, either. While buyers spent $5.77 billion getting ghoulish in 2008, revenue will drop 18 percent this year, to $4.75 billion, the National Retail Federation reports.

Young adults between the ages of 18 and 24 are expected to decrease their spending the most, from $86.59 last year to $68.56 this year.

"With part-time jobs more scarce and parents unable to help out financially, many young adults have been impacted substantially," reports Phil Rist, executive vice president of strategic initiatives at BIGresearch. "The overriding theme for Americans' Halloween celebrations this year will be, 'How creative can I be, and how can I spend?'"

But companies are taking steps to attract buyers as the air grows crisp. Wal-Mart is expanding its $10-toy promotion from last year. In 2008 the company offered 10 toys for $10, and this year, the chain will offer 100 toys for $10 through Christmas. Toys include Transformers, Barbies, board games, Hot Wheels Trick Track and Little Dreams Interactive Baby Doll. The company expects 70 percent of its shoppers to begin holiday shopping before Halloween.

And some companies will hire additional staff during the "giving season" as they have done in the past. Toys "R" Us, for example, recently announced it will hire 35,000 people for the holidays. Best Buy will hire more seasonal workers than it did last year, it notes.

"We see [competitive] price, plus services, as a major upside for us," notes the company's Chief Executive Brian Dunn.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

Other Entries by this Author

Follow Us