Cash-strapped consumers might not be hitting the malls with the same gusto they did pre-recession, but an expected uptick in food and beverage sales is likely to salvage the 2009 holiday shopping season, according to new research from Los Angeles-based research firm IBISWorld.
"The recession has caused people to go back to family values as opposed to simply buying presents," IBISWorld Senior Analyst Toon van Beeck explained. "Consumers just don't have the money to fork out on unnecessary gifts and luxuries such as traveling. Instead, they'll cherish time spent with close family and friends."
More often than not, he continued, that time will be spent eating and drinking at home, boosting holiday food and beverage sales to an estimated $27.7 billion — an 11.7 percent increase over 2008.
Overall, however, Christmas sales are expected to expand less than 0.2 percent to $128.1 billion, thanks to reduced consumer spending on gifts (-2.6 percent) and "other items" such as flowers, cards and postage (-4.8 percent), IBISWorld reported.
The company also said it expects Black Friday sales to increase 2.8 percent from last year to $42.9 billion.
"Consumers have become accustomed to sales and deep discounts during the past year," van Beeck said. "But retailers have low inventory levels this season and will try to keep prices high." As a result, "Shoppers will need to purchase before the stores run out if they have specific items on their gift list."
But if retailers try to avoid discounting key goods for too long, he continued, it could spell disaster.
"People don't have the disposable income this year and will simply look elsewhere for their gifts, making competition fierce and proper pricing crucial," van Beeck said.
If retailers can survive 2009, they could be in for a pleasant surprise next year when IBISWorld predicts total Christmas sales will jump 6.7 percent to $136.7 billion as the U.S. economy finally begins to rebound. Gift sales are expected to rise a solid 9.0 percent, and decoration sales, 14 percent, as consumers attempt to make up for a lack of spending during the previous two years.
For more information, visit http://www.ibisworld.com
source: PLBuyer Magazine
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