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Analyst Sees Drop in Christmas Retail Sales

"Perfect storm" for retailers this holiday season

November 13, 2008

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Consumers apparently plan to sit on their wallets this Christmas shopping season.

According to the America's Research Group/UBS Christmas Survey, Americans say they will spend less and buy fewer gifts this year. These are the highest figures in 13 years for "spending less" and 8 years for "buying fewer gifts."

Calling this Christmas shopping season a "perfect storm" for retailers, C. Britt Beemer, CEO and founder of America's Research Group predicted that retail sales will be down one percent compared to last year -- his first negative forecast in 23 years of conducting Christmas surveys.

"This year looks so bad," he said, "that even normally good signs for retail sales, such as more Americans staying home this Christmas, can't save the season for retailers."

Beemer has correctly predicted Christmas retail sales in 16 of the last 17 years.

Consumers are worried and 44.7 percent say they feel worse this Christmas than a year ago. The factors are many. Of those 40.1 percent of consumers spending less, 27.9 percent are concerned about the economy, 22.4 percent are trying to cut down on spending, Fifteen point seven percent have higher credit card debt, 13.7 percent are affected by gas and grocery prices and 10.7 percent cite job insecurity.

Parents, however, say they will try to create a jolly Christmas for their children in spite of their economic worries. Many will buy less for their spouse so they can spend their normal levels on the children. The children are aware, however. Over a quarter of parents believe that their children feel their financial pressure and are accepting their lower spending levels.

Of those consumers buying children's toys, 44.5 percent plan to spend less versus only 27.4 percent who plan to spend more. Almost half of parents say their child has no "must-have" toy. Bicycles, however, continue to be popular gifts with 12.7 percent of consumers looking to buy a bicycle, up from 9.9 percent last year.

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