The number of people expecting to spend less this holiday season than the last has increased significantly, a trend likely to lead to flat or declining sales this year, a market research firm said Wednesday.
People are planning to tighten the purse strings apparently as a result of the global economic crisis, which has left many of them uneasy about the future, The NPD Group said. In a survey of more than 2,000 consumers, NPD found that the percentage of people planning to spend less increased to 26% from 18% a year ago. The percentage expected to spend more remained the same at 11%.
"For the first time, I am predicting flat to declining sales for the holiday season," NPD analyst Marshal Cohen said in a statement. "With consumers already saying they plan to spend less, stores with lean inventories, those inventories on sale as soon as they hit the floor, and tightening credit both for businesses and consumers, where can growth come from?"
So far, no "must-have" gift is expected to drive consumers to stores, which was the case last year with personal navigation devices. While there's still time for some hot new item to appear, "so far nothing has surfaced, and in short-order if nothing does, it will be too late," Cohen said.
Discounted prices would likely be the biggest lure to stores. The NPD survey found that 60% of consumers would chase either a "special sale price" or "overall value for the price."
The good news in the survey was that people still planned to buy holiday gifts. Apparel was once again the most likely gift item this year, followed by toys, NPD said. Electronics, such as TVs, DVD players, cellular phones, PCs, MP3 players and digital cameras, came in fifth. Movies and books were third and fourth, respectively. Rounding out the top 10 items were number six video games, followed in order by accessories, such as watches and handbags; music, food and fragrances.
Two items that could emerge as bright spots in the potentially bleak holiday season are sunglasses and TVs. With the last full year of analog reception coming to a close as broadcasters prepare for government-mandated digital broadcasts, people may be looking to buy digital sets. "With prices at all-time lows and not all consumers wanting to deal with signal conversion boxes, we could see some good news here," Cohen said.
Sunglasses are expected to be the "sleeper category" this year, because of their popularity among young adults. "The younger market is all over them and the bigger the logo the better," Cohen said. "They are the most sought-after item by young adults and will surely be their most desired gift."