Marketwatch: Holiday Sales to Fall

Brand Keys, Inc., a New York City-based brand and customer loyalty research consultancy, is predicting a drop in holiday spending by 5 percent in 2008, citing a "combination of a depressed economy and equally depressed consumer." Brand Keys interviewed 16,000 consumers in the nine U.S. census regions in regard to their holiday spending.

"Given that there isn't any increase in anticipated spending this year, you'll see retailers competing for fewer consumer dollars," said Robert Passikoff, president of Brand Keys. "There are always lower product prices around this time of year, but retailers are going to plan promotions very carefully. It's going to be a very carefully orchestrated competitive retail environment this year."

The number of consumers who indicated that they were going to spend less increased, as did the number of consumers indicating that they were going to spend the same. Consumers indicating that they were intending upon spending more this year decreased by 75 percent over last year.

According to the survey, the customers will spend, on average, about $775 this year, 5 percent less than last year. Specific loyalty to retail channels also remains in question as consumers indicated that they would use the full range of retail formats and channels.

"More shoppers, with thinner wallets and seeking to avoid the crowds, lines at check-out, and the stress associated with bricks-and-mortar shopping, say they'll go online to shop this holiday season," noted Passikoff. Given that consumers are being careful about spending, they'll also be looking for retailers where there is a higher level of customer service. Attributes like those seem to pump up the price-value equation. That's where department stores will benefit most and will most probably look to encourage multiple visits by customers.

Nearly two-thirds of the consumers surveyed indicated that they've already begun their holiday shopping earlier this year, with most indicating they've been looking for  sales well before the traditional post-Thanksgiving Black Friday.


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