Future Spending Index Shows Encouraging Holiday Tr
Columbus, OH, November 4, 2005 - Retail Forward's Future Spending Index registered an improvement this month following October's falloff, a sign that consumers plan to increase the spending pace in the first month of the holiday shopping season. The index rose to 96.8 from 94.0 last month.
"This month's results indicate that the harsh hurricane season is quickly becoming a distant memory for those not directly affected," said Steve Spiwak, an economist with Retail Forward. "The short-lived hurricane impact is most evident in a bounce back in optimism about job prospects, the key driver of spending. The moderation in gasoline prices from post-hurricane peaks also is boosting spirits as the holidays approach."
Indeed, ShopperScape results show that far fewer shoppers say they will curb holiday spending as a result of the storms compared with last month. This bodes well for discretionary services and products, such as entertainment outside the home and consumer electronics, which were most vulnerable to last month's storm-induced dip in spending plans.
Still, shoppers also said they plan to spend at a softer pace than last holiday, which is in line with Retail Forward's forecast for a modestly weaker holiday shopping season. Additionally, most shoppers reported that finding the best bargains on gifts will be a primary goal, which should produce a highly promotional holiday season.
The Future Spending indexes for the Up, Middle and Down Market segments all rose this month following declines for each of these income cohorts last month.
The Future Spending Index for Down Market households (incomes less than $22,500) turned in the biggest increase, rising to 106.9 in November from 102.6 in October. Stronger assessments of the value of investments and a pick up in home buying are the key drivers of that increase. Job security slipped a bit but remained near last month's high level, buoying the overall index for this segment.
The index for Middle Market households (incomes between $22,500 and $75,000) improved two points to 95.1 in November. This segment is benefiting most from an up-tick in job prospects, lighter debt loads and elevated home buying.
Brighter views of the job situation, financial markets and debt loads bolstered the November Future Spending Index for Up Market households (incomes greater than $75,000). The index for this segment increased to 94.9 from 91.6 last month, boosted in part by a pick up in home buying.
Last year's strong holiday performance-the best since 1999-will be tough to repeat. In fact, most shoppers are planning to spend about the same or less on gifts this year compared to last holiday. Any lingering effects of the recent natural disasters and higher prices at the pump than a year ago likely are two reasons why the pace of spending could come in weaker than in 2004.
Overall, a combined 13% of shoppers are planning to spend a lot/somewhat more this year on holiday gifts compared to last year, down from 19% last year.
Nearly half (46%) of all shoppers plan to spend about the same this year on holiday gifts compared to last year; this percentage is down slightly from last year's 50%.
In addition, more shoppers are planning to spend less this year on holiday gifts. Slightly more than one-third (36%) of all shoppers will be keeping a closer eye on their budgets during the upcoming holidays, up from 26% at this point last year.
Down Market shoppers are most cautious about their spending plans, with about one-fifth (21%) planning to spend a lot less than last year.
