Pam Goodfellow, our Principal Analyst, recently presented a Consumer Behavior and Economic Update at an event for financial leaders in the retail industry hosted by the National Retail Federation. (You can view a PDF of the presentation here.) She provided timely insights heading into the holiday season including an economic overview and a special “holiday historical” section that highlights trends we may see in 2014. Her analysis paints a modestly optimistic holiday season; however, we’ll see more definitive thoughts from shoppers on gift spending when the NRF releases its first round of consumer insights for the holiday season later this month. Click through for key takeaways from the presentation.
3 Key Takeaways: Current Economic Sentiment
1. Consumer confidence in September 2014 was the highest reading since October 2007 as well as the first September reading to register above 40% since before the recession. However, we expect that cautious consumers will continue to have up-down feelings toward the economy in the coming months.
2. Both practicality and focus on necessities have backed down since the height of the recession but remain elevated from pre-recession levels.
3. All income groups report that they feel more secure about their positions on savings compared to pre-recession counterparts. Increasing savings remains a key priority among consumers.
3 Key Takeaways: Future Spending Plans
1. Consumers don’t appear to be spending at the expense of savings, but some do seem willing to take on more debt, with those maintaining small credit card balances (under $5,000) on the rise.
2. The Prosper Consumer Spending Forecast is up 1.7% month-over-month, up 4.9% year-over-year and up 5.2% since September 2007. Directionally speaking, overall spending plans in the short term looks positive, particularly for discretionary items.
3. The Prosper Holiday Spending Score, recorded in early September, indicates that consumers have a more positive outlook for holiday gift spending in 2014 compared to 2013.
3 Key Takeaways: Holidays Past
1. While they present exciting long-term opportunities for retailers, Millennials only accounted for 18% planned gift spending in 2013. Representing two-thirds of holiday gift spending, Gen X and Boomer shoppers cannot be ignored by marketers.
2. Credit cards have taken a backseat to debit card usage for holiday gift spending since the recession; however, credit card usage may rise in 2014 with consumers more willing to carryover small amounts of debt on their plastic from month to month.
3. Last year 44% of Thanksgiving/Black Friday weekend budgets were spent online, up 40% from 2008. The popularity of shopping this weekend, and into Cyber Monday, continues to rise among consumers.
Click here to view the presentation.