by Kelly Burnett
Decorations may be red-and-green but economists are finding a gray mood as shoppers head to the stores. High unemployment, shrinking consumer credit and limited holiday spending may crimp gift-giving in the Hub.
Retail analyst Keith Anderson said shoppers are finding new ways to buy smartly – giving gifts but cutting costs. One tactic is less expensive gifts that still give their loved ones what they want.
“Many shoppers are trading down within discretionary categories like electronics by buying a lower-quality product than they would have in the past, while others are trading out of categories altogether and substituting lower-cost alternatives,” he said.
One option is giving tickets to a movie theater vs. buying a flat-panel TV — though it might be an extreme example.
Anderson said this will be a very difficult holiday for business. He analyzes retail strategy and consumer-facing technologies for large chain retailers such as Wal-Mart. There are many reasons for the challenging environment as retailers and shoppers adapt to the ongoing recession.
Massachusetts unemployment rates have hovered around 9 percent, slightly lower national unemployment rates of 9.8 percent in September and 10.2 percent in October. November’s state figures are not yet available
Consumer credit has also decreased in 12 of the past 13 months. According to the most recent data, in October outstanding consumer credit fell by $3.5 billion, down from a year ago by nearly 3.6 percent.
To put this holiday’s spending into perspective, according to Gallup Poll numbers, last year’s Black Friday saw Americans spending an average of $177 compared to $109 average day spending. This year’s Black Friday spending was an average of $69, compared to average day spending which is currently at $62.
However, Anderson said the bulk of holiday shopping has yet to occur, with people holding out for sales closer to their holiday deadline.
“Behaviorally, many shoppers are deferring purchases. About half of shoppers have begun their holiday shopping, but the vast majority have not finished. I think they have been conditioned to seek deals, so they’re waiting for steeper discounts,” he added.