U.S. consumers seeing smaller discounts

CHICAGO Tue Jan 12, 2010 6:10pm EST

A holiday shopper carries bags through Herald Square in New York December 23, 2009. REUTERS/Mike Segar

A holiday shopper carries bags through Herald Square in New York December 23, 2009.

Credit: Reuters/Mike Segar

CHICAGO (Reuters) - U.S. consumers found smaller post-Christmas discounts in stores this year, which could weigh on January spending as many remain worried about their financial situation, a survey showed on Tuesday.

A total of 68.4 percent of consumers surveyed by America's Research Group said they saw smaller discounts this year than last year after Christmas.

That may have been expected, as retailers ordered less inventory this holiday season to try to avoid the margin-sapping discounts that hammered profits a year earlier when demand failed to materialize.

Meanwhile, 40.1 percent of those surveyed said they felt worse than they did a year ago about their financial situation, which means those smaller discounts may fail to keep shoppers buying well into January, said Britt Beemer, America's Research Group founder.

"You never want the negative numbers to ever get above 25 percent," Beemer said. "I just think it is a reflection of how frugal the consumer is and is going to remain in the marketplace," he said.

Retailer sales beat expectations in December, but industry experts see the momentum fading early in 2010 as consumers return to saving their money.

America's Research Group asked 1,000 U.S. consumers several questions for Reuters on January 8-11 as part of a larger survey the group conducted. The telephone survey had a 3.8 percent margin of error.

Among the other findings, 35.8 percent said they had received fewer gift cards this holiday season, while 21.8 percent said they received more.

Also, 28 percent said the value of the gift cards was smaller, while only 15.2 percent reported the amount was higher.

The smaller gift cards might have led consumers to use them more freely for optional purchases rather than necessities, Beemer said. Some 41.6 percent said they used the cards on optional purchases, while 22.4 percent said they used them on necessities.

"Historically, when the dollar amount is less, the more they are used for optional purchases," Beemer said.

(Reporting by Brad Dorfman)