Consumers to Cut Holiday Sending, Search for Value

Yet, another report has confirmed what most consumers already know, they will be cutting back on holiday spending.

This most recent report, from The Nielsen Co., found that 35% of U.S. consumers across all income levels expect to spend less.

With an economy in shambles, only 6% expect to spend more and 50% said they would spend the same amount as last year during the holiday shopping season, historically defined as Thanksgiving week through the last week of December.

The survey found that spending cuts are also being planned by high-income consumers, or those making $100,000 or more. Nearly one-third of affluent shoppers expect to spending less and only 5% plan to spend more, the study found.

“Clearly, consumers across all income levels have some trepidation about holiday spending,” said Todd Hale, senior vice president, consumer and shopper insights, in a release. “The unstable economic environment is creating a high level of caution among consumers.”

Of holiday shoppers who said they would spend about the same, about half will do the buying in grocery stores, supercenters and mass merchandisers. Department and electronic stores may have a tougher go of it, with almost one-third of consumers expecting to spend less in these stores this year. Convenience and gas retailers may come out ahead with 12% of consumers expecting to spend more in these locations, likely related to a rise in pre-paid gas cards as gifts this holiday season.

“Retailers answering consumers’ call for value will capture shoppers’ attention this holiday season,” Hale said. “Whether it’s lower prices, instant rebates or free shipping offers, value messages will speak to bargain-seeking consumers in today’s tough economic climate.”

Nielsen forecasts 4.7 percent growth in dollar sales or $98 billion across grocery stores, drug stores, mass merchandisers1 and convenience stores, for the holiday shopping season. The growth forecast, slightly higher than last year’s 4.5 percent gain, is in large part due to higher commodity prices. Nielsen projects unit sales, however, to be flat or down 0.8 percent versus a year ago.

Nielsen suggests:

*Manage inventory carefully
*reach out to your best customers
*Necessities, not the nice-to-haves, will drive strong sales this holiday season
*Leverage CPG products to drive basic gifts and stocking stuffers, such as toiletries, pet care, household cleaners and special holiday packs for food and beverage items.

Nielsen surveyed more than 21,000 U.S. households about their holiday spending expectations in September 2008.