Holiday Spending Expected To Rise To $688.87 Per Person

The National Retail Federation says that the average consumer will spend $688.87 this holiday season–exactly–up from $681.83 last year. The 1% improvement is not likely to save the sector from another difficult year of low margins, losses, and some amount of layoffs at the end of the holidays.

Average expenditures were over $750 per shopper in 2007.

The NRF’s 2010 Holiday Consumer Intentions and Actions Survey was conducted by BIGresearch. The survey polled 8,767 consumers and was conducted from October 5th through the 12th of this year. The consumer poll has a margin of error of plus or minus 1.0 percent. The projected improvement in not an optimistic sign since it is within the margin of error.

The research says that “As in years past, most holiday gift-givers will spend the largest portion of their budget buying gifts for family ($393.55) and friends ($71.45).” It also notes that “61.7 percent of shoppers say the economy will impact their spending, down from last year’s 65.3 percent. Many shoppers say they will compensate by spending less (81.5%), comparison shopping online (30.9%) or with newspapers and circulars (28.1%), shopping for sales (54.1%) or using more coupons (40.6%).”

The NRF may paint the news as moderately good, but it is not. Though Amazon.com (NASDAQ: AMZN) and the online businesses of firms like Walmart (NYSE: WMT) have benefited from the boon in Internet shopping, most retailers continue to rely on store sales for the great majority of their revenue. Each item bought online is a chance lost for a store-based sale.

According to the study, shoppers are also going to be unusually aggressive this year as they look for discounts. That will bring margins down, but it will also make inventory control difficult. Retailers will have to outguess shoppers about which items they will buy in large numbers if discounted. The inventories of those items, are in turn more likely to be depleted. Other items which retailers cannot afford to discount or choose not to, could still have large inventories at the end of the season.

The data from the study which says people will look for sales does not say much. Most shoppers would try to buy items on sale even during a robust economy. The fact that they continue to do so likely represents no shift in behavior.

What says a great deal is that the average American shopper will not spend much more than during the holiday depression two years ago. The idea that a research firm would actually believe that it could predict a figure as accurate as $688.87 is evidence of how good the NRF people are when it comes to the creation of a “PR worthy” announcement. “$698” would not do just as well.

The number, no matter how closely it is rounded to the dollar, is depressing and shows just how little consumer confidence has rebounded since the depth of the economic catastrophe.

Douglas A. McIntyre