Thus far, it’s been a fairly meh holiday season for retailers, with extraordinarily price-sensitive consumers holding off on making purchases unless an amazing deal is staring them in the face.
It’s been an especially competitive shopping season for retailers. The autumn federal government shut down, stagnant wages among the middle class, and continued economic uncertainty have all pushed shoppers to scale back on holiday purchases. The other major factor causing consumers to hold off on hog wild holiday shopping expeditions comes largely the result of retailers’ own tactics: After years of dramatic discounting throughout the two-plus months before Christmas, shoppers have been conditioned to wait to buy until they see amazing, can’t-pass-up deals.
So while shoppers came out in full force to crowd the malls over Black Friday weekend, average spending declined because of shoppers’ reticence to open their wallets, and because when they did spend, it tended to be when prices were super low. In many cases, the hottest-selling merchandise weren’t big-ticket items but cheap goods with marginal (or no) profits for stores, like the bath towels at Walmart selling for 29¢ apiece.
The main hope retailers still have is that consumer spending suddenly kicks into high gear during the final two weeks before Christmas. Yet the results of a new survey indicate that’s probably not going to happen—because an unusually high percentage of consumers is already done with their holiday shopping.
According to the poll, from America’s Research Group and Inmar, 30.8% of consumers say they are already done, or 90% done, with their holiday shopping. That’s the highest portion reporting to be done with shopping this early in the season in at least a decade. In 2008, the next highest year for consumers being done (or nearly done) with holiday spending by the first week of December, 25.3% said they were finished with at least 90% of their holiday purchases at this time of year.
What’s more, those who still have shopping to do tend to be waiting for especially good deals: 45% say they’re holding off until they see markdowns of at least 70% off. These are the folks who have been through this all before, and are sitting back, waiting for prices to inevitably fall. More so than ever, they understand that in this game of chicken—with consumers waiting for deep discounting and stores trying to avoid giving away the store—it’s shoppers who are in the driver’s seat of late. Today’s shoppers are well aware that retailers, facing a glut of inventory, are bound to resort to panic sales as the end of the year nears. If shoppers don’t get the prices and selection they want in stores, they’re well practiced at turning to the web—which is why online sales have continued to rise like gangbusters.
Retailers don’t even seem to be able to rely on American’s wealthiest consumers to spend like wild this season. While stores understandably hope to attract customers with the most money, Bloomberg News reports that overall, high earners are also holding back during the current holiday season. “They’re very restrained and feeling very uncertain about their personal prospects and the economy at large,” explained Pam Danziger, president at Unity Marketing, which earlier this year released a poll indicating that 85% of affluent shoppers would be spending less or the same on holiday purchases as they did last year.
Given the reality right now—with more consumers nearly done with holiday shopping compared to the past, and with stores still eager to boost sales—it seems like retailers have no choice but to give customers the last-minute discounts they’ve come to expect. There will certainly be plenty of shopping taking place in the weeks ahead. It’s just yet to be determined whether retailers or shoppers will be more pleased with the final prices in these transactions.