(Reuters) - Almost two thirds of adults won’t spend more this holiday season despite lower gas and fuel costs, a new Reuters/Ipsos poll shows, in a bad sign for retailers looking for an extra boost in gift buying from cheaper prices at the pump.
The recent slide in gas prices and signs of economic improvement had raised the possibility of stronger holiday sales.
But the survey of 1,707 adults conducted November 12-17 found that almost 60 percent remain cautious about spending because of "economic uncertainty." See graphic link.reuters.com/huc53w
Follow-up interviews with poll respondents found concerns about stagnant paychecks, higher food prices, unemployment and underemployment.
“We live on a budget so we have a certain amount for groceries, a certain amount for birthdays, a certain amount for holidays,” said clerical worker Christine Bogolawski, 44, of Cumberland, Rhode Island, who plans to spend about the same as last year and plans to bank what she saves at the pump. “It’s only a few cents per fill up,” she said.
Bogolawski is not alone in prioritizing savings. Americans learned to spend less during the recession, and they’re not quitting those habits quickly. The savings rate rose slightly in September, while wages remained almost unchanged, and meat prices jumped in October even as the wholesale gasoline costs fell 5.8 percent for the month.
Still, the unemployment rate dropped in October to 5.8 percent, a 6-year low, and the National Retail Federation estimated holiday sales would climb by 4.1 percent, versus a 3.1 percent climb last year.
Several retailers including Wal-Mart, Target and Sears Holdings hope to benefit from lower gas prices, which recently fell below $3.00 for the first time since 2010.
“Fuel prices absolutely help,” John Mulligan, CFO of Target, said on a Wednesday call with reporters after the company posted a quarterly profit above expectations.
But gas prices are no guarantee of better sales, he said. “I think there is a lot of cross-current mixed signals for consumers, and we expect them to be very focused on price as they have been, very focused on promotions.”
The number of shoppers expecting to spend less this year than last outweighed those who expected to spend more in every category in the Reuters poll, except food, which was nearly balanced. Some 30 percent expect to spend less on electronics, 37 percent less on jewellery and about a quarter less on clothes and toys. Almost 20 percent said they would spend more on clothes, 14 more on electronics and toys, and only 7 percent more on jewellery.
Similar to last year, 10 percent of consumers plan to shop mostly at department stores such as Macy’s, J.C. Penney, Nordstrom and Kohl’s, but only 24 percent plan to spend mostly at discount stores, such as Walmart, Target and Kmart, down from 31 percent at this time last year. This year 40 percent expect to use a mixture of stores, compared with 35 percent last year.
The online poll has a credibility interval, a measure of precision, of plus or minus 2.7 percentage points.
Americans also have learned in recent years to find the best deals on the internet.
“You don’t have to walk into the mall to see who has the best prices,” said Charlie O’Shea, senior retail analyst at Moody’s, which expects holiday sales to be slightly better than last year.
That’s forced stores to not only compete on price but also extend the shopping season in the hopes of getting consumers to shop more often and spread their spending over several paychecks, said analysts.
Walmart, Amazon and others started promotions just after Halloween. By Black Friday, the day after Thanksgiving, 34 percent of retailers will have run most of their holiday season promotions, according to a survey by consultant firm BDO USA. For years, Black Friday was considered the kickoff to the holiday shopping season.
Nearly two-thirds of retailers plan to offer more discounts and promotions this year than last, BDO said.
A quarter of shoppers said in the Reuters poll that they plan to use in-store pick-up. Retailers hope that these consumers will buy other merchandise, with perhaps less focus on price, during pick up.
“If you’re physically there, even if you know it’s $5 cheaper somewhere else are you going to wait in another long line?” said Ted Vaughan, a partner in the Retail and Consumer Products Practice at BDO.
Reporting By Jilian Mincer; Additional Reporting by Nathan Layne in Chicago; editing by Peter Henderson