Christmas 2009 Vs. 2008: What Can We Expect?

By Katie Adams | December 01, 2009 AAA
Christmas 2009 Vs. 2008: What Can We Expect?

For retailers and consumers alike, Christmas 2008 was, in a word, dismal. Spending was down, across the board. Holiday spending dipped by 3.4%, and retailers realized double-digit sales declines across every category, the worst since the 1980s. With a few notable exceptions (Nintendo Wii and Apple iPod Touch), spending on big ticket electronic items dropped a dramatic 26.7%, and spending on clothing didn't fare much better; women's clothing was down 22.7% and menswear was only somewhat better at -14.3%. On top of that, according to Consumer Reports, nearly 6% of all American adults are still repaying debt accumulated during last year's holiday season. That number rises for young families - 10% of all households with children under 12 are still saddled with credit card debt from Christmas, 2008. (Use the tips in Avoid Overspending This Holiday Season for a bountiful Yuletide on a Scrooge-like budget.)

Have Things Improved?
In the 12 months, the economy hasn't improved significantly…

  • Unemployment has risen to 10.2%
  • The number of homeowners "underwater" on their homes has increased to 23%, or nearly 10.7 million homeowners
  • 124 banks have closed
  • Credit card companies have slashed credit limits, tightened repayment standards and hiked interest rates
  • Several major retail chains have gone under, including Circuit City and KB Toys

Against that gloomy backdrop, the main question is, "What can we expect this year?"

  • If Sales Jump, it Won't be High
    Mired in one of the deepest recessions this century, Americans are exercising more frugality. According to a November Gallup Poll, the average American anticipates spending $638 on Christmas, only slightly above last year's low of $616. However, The Conference Board reported last week that it estimates American households (not individuals) will spend only $390 on Christmas gifts, down from last year's total of $418. While initial Black Friday sales rose only by 0.5%, retail traffic tracker ShopperTrack still predicts a slim 1.6% increase in sales this holiday season. Whatever the actual number turns out to be, it looks like it will be a while before retailers can expect to see significant holiday sales growth.

  • Smartphones to the Rescue!
    According to a Deloitte survey, nearly one in five shoppers are using their web-enabled mobile phones (smartphones) to find the best deals this holiday season. Younger, tech-savvy shoppers (age 18-29) more heavily rely on their phones for shopping – almost 40% said they would use their phone to browse and buy before Christmas. To capture a greater share of this quickly-emerging market, trends websites like Yowza are connecting with customers through their mobile devices. Shoppers use the sites to search for deals in their areas and then present their phone, displaying the coupon barcode, to the cashier for scanning at checkout.

  • Cash Will Make a Comeback
    Whether it's because credit card companies have slashed credit limits, or because consumers want to avoid double-digit interest rate hangovers come January, more people plan on using cash to make holiday purchases than last year. According to a recent BIGresearch/National Retail Federation survey, 9.2% more consumers plan on paying for gifts by cash this Christmas. Only 28.3% plan to charge Christmas purchases this year, down from 31.5% in 2008.

  • Online Shoppers' Spending to Surge
    Initial Black Friday results from the sales and traffic tracking firm ShopperTrak revealed that, while more shoppers still venture out to malls, the trend to stay and home and shop online is growing. Additionally, at-home online shoppers are buying more ($170.19 on Black Friday 2009 vs. $126.04 for Black Friday 2008). With an increase in retail stores pushing online promotions, look for the increase in at-home shopping to continue through the holiday season.

  • Sentiment Will Win
    While there are still likely to be plenty of Zhu Zhu Pets and Wii gaming systems under the tree this year, a large percentage of female shoppers are looking for more "meaningful" gifts this year. According to the 2009 VoiceQuilt "National Trends in Gift-Giving" study released earlier this year, 74% of women surveyed said they intend to focus their giving on more sentimental or original gifts.

Consumers have become much more price-conscious as a result of the recession, and retailers have taken note. There are far fewer high-price gift items on shelves this year; instead big box stores and discounters have made space for bargain-priced toys instead. (Holiday expenses can drown you in debt. Find out how to avoid this festivity hangover, in Keep Holiday Debt From Snowballing.)

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