Holiday Spending by Affluent and Luxury Consumers May Help Create Pleasant Surprise for Retailers
With many different organizations providing their predictions of holiday sales and others offering their estimates of actual holiday sales, using various methodologies, it is understandably confusing and difficult to determine what the consumer is actually doing.
While retail sales for November, particularly on Black Friday and Cyber Monday, have been encouraging for retailers, there is a risk that these positive comparisons to 2010 sales primarily reflect a change in the timing of purchases rather than in volume or total value.
In a difficult economy, where average consumers are focused on finding good value and discounts, the special offers made by retailers during November have probably enticed many consumers to make purchases earlier than they would have otherwise.
On the other hand, if gasoline prices stay at current levels and the employment picture is seen to be improving, then the recent increase in consumer confidence could be indicative of continued year over year increases in spending during the remainder of the holiday shopping season.
If the stock market stays above 12,000 for the Dow Jones average, there is a good chance that affluent and luxury consumers will contribute to stronger December sales.
In a fall 2011 survey of the wealthiest 10% of US households, about one in ten respondents said they do not plan to buy holiday gifts this year.
This is a slight improvement over the survey in the prior year.
Among the affluent consumers who do plan to buy holiday gifts this year, 28% predict spending less than they did in 2010 and 69% plan to spend the same.
For both groups, this is essentially the same as the 2010 survey results.
Among the 3% of affluent consumers planning to spend more, an average spending increase of about 9% was indicated.
For the group who plan to spend less this year, an average decrease in expenditures of 14% was indicated.
Again, for both groups, this is essentially the same as the 2010 survey results.
The mood of affluent consumers, who own about 80% of all stocks and bonds, is influenced by conditions in the stock market.
On average, the affluent in the survey predicted they would spend 3.
7% less or a total of $2,270 for holiday gifts this year.
Despite the possibility of the affluent spending less per household, total gift spending by the affluent was estimated to increase by 2.
3% to $23.
6 billion as the result of an increase in the number of affluent households planning to buy gifts this year.
As the survey was conducted at a time of some stock market weakness and volatility, this probably depressed the estimates of spending by the affluent.
For this reason, and because consumers often spend a bit more than they had planned, particularly during the holiday gift season, there is a good chance that affluent and luxury consumers will spend the same or slightly more per household than last year.
This could result in an increase of 5% or more in total spending by the affluent.
The average spending by affluent households for holiday gifts is over four times that of the $518 average expenditure for all households estimated by the National Retail Federation, based on a survey by BIGresearch.
The NRF is anticipating a 2% to 3% overall increase in retail sales for the holidays.
The national survey of affluent consumers included responses from 499 men and women that responded promptly and met the minimum net worth requirement.
To be included in this survey, the respondents were required to have a minimum $800,000 net worth, which is the threshold for the 11.
4 million households that comprise the wealthiest 10% of U.
S.
households, according to Federal Reserve Board research.
On average, the survey respondents have an income of $282,000 per year and a net worth of $3.
1 million.
The average value of their primary residence is $1.
1 million.
The 20th in a continuing series of twice-yearly surveys that track the 12- month economic outlook and spending plans of the affluent consumers who represent almost half of all consumer income and spending and a third of the total US economy, the latest survey was designed to also answer such questions as what do millionaires want to receive as holiday gifts this December and where will the affluent buy their gifts this year.
While retail sales for November, particularly on Black Friday and Cyber Monday, have been encouraging for retailers, there is a risk that these positive comparisons to 2010 sales primarily reflect a change in the timing of purchases rather than in volume or total value.
In a difficult economy, where average consumers are focused on finding good value and discounts, the special offers made by retailers during November have probably enticed many consumers to make purchases earlier than they would have otherwise.
On the other hand, if gasoline prices stay at current levels and the employment picture is seen to be improving, then the recent increase in consumer confidence could be indicative of continued year over year increases in spending during the remainder of the holiday shopping season.
If the stock market stays above 12,000 for the Dow Jones average, there is a good chance that affluent and luxury consumers will contribute to stronger December sales.
In a fall 2011 survey of the wealthiest 10% of US households, about one in ten respondents said they do not plan to buy holiday gifts this year.
This is a slight improvement over the survey in the prior year.
Among the affluent consumers who do plan to buy holiday gifts this year, 28% predict spending less than they did in 2010 and 69% plan to spend the same.
For both groups, this is essentially the same as the 2010 survey results.
Among the 3% of affluent consumers planning to spend more, an average spending increase of about 9% was indicated.
For the group who plan to spend less this year, an average decrease in expenditures of 14% was indicated.
Again, for both groups, this is essentially the same as the 2010 survey results.
The mood of affluent consumers, who own about 80% of all stocks and bonds, is influenced by conditions in the stock market.
On average, the affluent in the survey predicted they would spend 3.
7% less or a total of $2,270 for holiday gifts this year.
Despite the possibility of the affluent spending less per household, total gift spending by the affluent was estimated to increase by 2.
3% to $23.
6 billion as the result of an increase in the number of affluent households planning to buy gifts this year.
As the survey was conducted at a time of some stock market weakness and volatility, this probably depressed the estimates of spending by the affluent.
For this reason, and because consumers often spend a bit more than they had planned, particularly during the holiday gift season, there is a good chance that affluent and luxury consumers will spend the same or slightly more per household than last year.
This could result in an increase of 5% or more in total spending by the affluent.
The average spending by affluent households for holiday gifts is over four times that of the $518 average expenditure for all households estimated by the National Retail Federation, based on a survey by BIGresearch.
The NRF is anticipating a 2% to 3% overall increase in retail sales for the holidays.
The national survey of affluent consumers included responses from 499 men and women that responded promptly and met the minimum net worth requirement.
To be included in this survey, the respondents were required to have a minimum $800,000 net worth, which is the threshold for the 11.
4 million households that comprise the wealthiest 10% of U.
S.
households, according to Federal Reserve Board research.
On average, the survey respondents have an income of $282,000 per year and a net worth of $3.
1 million.
The average value of their primary residence is $1.
1 million.
The 20th in a continuing series of twice-yearly surveys that track the 12- month economic outlook and spending plans of the affluent consumers who represent almost half of all consumer income and spending and a third of the total US economy, the latest survey was designed to also answer such questions as what do millionaires want to receive as holiday gifts this December and where will the affluent buy their gifts this year.
