The average consumer is expected to spend less on the winter holidays this year. Yet it’s anticipated that overall holiday spending will rise slightly compared to 2010. How could this be? While middle-class shoppers scale back, rich people—who typically drop four times more dough on holiday gifts than the average family—will be making more purchases this season.
According to a recent National Retail Federation survey, shoppers will spend an average of $704.18 on gifts and seasonal merchandise for the upcoming winter holidays. (Make that ongoing winter holidays since many retailers announced that the Christmas shopping season now starts in September.) Holiday spending usually increases from year to year—except when it doesn’t, due to a troubled and/or uncertain economy. And this year, typical shoppers are scaling back compared to 2010, when the average holiday expenditure totaled $718.98. Pre-recession, the average was over $750.
At the same time, the NRF forecasts that malls around the U.S. have reason to still be jolly. Overall holiday retail sales are expected to increase by 2.8% in November and December, adding up to $465.6 billion.
How could the average consumer spend less and overall spending still rise? One explanation is that the holiday spending sprees of the wealthiest Americans will be bigger than last season, and their gluttony of purchases will more than make up for the rest of us who are slacking in the consumption department.
Using data from the American Affluence Research Center, the Wall Street Journal reports that the richest 10% of Americans will spend 2.3% more than last year on holiday gifts. That translates as $2,270 in gifts—or four times more than the average family’s gift budget of $518. (The NRF figures also factor in costs for seasonal decorations, not just gifts, which is why its average holiday spending figures are higher.)
(GALLERY: 12 Things We Buy in a Bad Economy)
Curiously enough, the most desirable gifts cited by the richest Americans are gift cards and cash. You might think that people with plenty of money and resources to buy what they want wouldn’t simply want more. But you’d be wrong. At least in this one way, the rich aren’t that different from the masses: The NRF survey says that gift cards are tops on everyone’s shopping list, with 57.7% of consumers saying they’d like to receive them over the holidays.
The fact that the rich are spending more while the rest are scaling back isn’t limited to the holiday season. Despite the recession and its lingering aftershocks, high-end retailers favored by the rich such as Tiffany’s, Coach, and Estee Lauder are experiencing far stronger sales than retailers aimed at the masses, including Target, Kohl’s, and Gap. By no coincidence, lower-end retailers beloved by bargain hunters—Costco, various dollar stores—have also seen an uptick in sales.