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Report: Consumers Spending Less, Spreading Out Holiday Shopping

BY CSA STAFF

New York City The tight economy has shoppers looking at their holiday shopping lists and rethinking their shopping strategies this year. Besides sticking to holiday budgets this year, many shoppers are starting their shopping earlier in hopes of taking advantage of discounts.

These were a few of the highlights in the Accenture Holiday Shopping Survey. The new study was based on a Web survey that asked 537 consumers about their buying and spending plans for the upcoming holiday season.

Retailers will be battling for consumers’ holiday budgets this year, as rising food, home energy and gas prices continue to impact holiday shoppers. In fact, 88% of surveyed shoppers plan to spend either the same level or less this year compared to 2007, the study said. Fifty-four percent of shoppers expect to spend approximately $100 less than they did last year, and 22% plan to spend $250 less than 2007, the study said. Nearly one-third of respondents (29%) blame this pullback on an economy that is weaker than last year, the study said.

And these shoppers don’t expect to be easily swayed by impulse purchases. Fifty-eight percent of consumers reported that they will stick to holiday budgets, compared to 48% last year.

One way they plan to keep to these budgets is to spread out their shopping over a longer timeframe. Rather than wait until Black Friday, the unofficial launch of the holiday shopping season, to hit the stores, 45% of shoppers plan to starting their shopping before Thanksgiving.

Black Friday will still attract holiday shoppers into the stores, but less will be making those trips into stores and online. Forty-six percent of participants reported they typically shop on Black Friday, but only 42% plan to do so this year.

Online shopping looks promising with 29% of holiday shoppers saying they will log onto their favorite retailers on Cyber Monday and 21% plan to spend between $251 and $500. Meanwhile, 88% of shoppers said they plan to research gifts online, but 31% will not purchase this merchandise online.

Almost half of surveyed shoppers (49%) will complete their holiday shopping between Black Friday and Dec. 21, but 38% of consumers plan to wait even later. Thirty-eight percent of participants plan to delay shopping until later in the season in hopes of getting better discounts. In fact, 61% of shoppers reported that advertising is the primary way they learn about holiday merchandise and gift ideas.

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Small formats have big future at Wal-Mart

BY CSA STAFF

BENTONVILLE, Ark. —Wal-Mart hasn’t discussed expansion plans for its new Marketside stores, but the company has indicated small-format stores will play a much bigger role in its future.

The average size of new supercenters is shrinking to a range of 140,000 square feet to 170,000 square feet, compared to 195,000 square feet just a few years ago. By opening smaller stores capable of achieving comparable sales volumes through supply chain efficiencies and reduced product assortments, Wal-Mart can make more efficient use of its capital.

The reduction in supercenter size comes as the company further reduces the planned number of new units. But as supercenter growth decelerates, Wal-Mart looks to tap growth opportunities with small stores. It has identified 15 large-opportunity markets where it has a limited presence and, according to U.S. Stores division president Eduardo Castro-Wright, could achieve enormous sales potential.

“If we had the same market share in those 15 opportunity markets as in the rest of the U.S., it would represent a larger opportunity than exists in India and Russia combined,” he said. “It is a very significant opportunity for us and one you will see us invest more in, in the future.”

Wal-Mart’s problem is that it doesn’t have the right vehicle to reach those markets, which explains why the 15,000-square-foot Marketside was developed. However, Wal-Mart’s global portfolio includes numerous small formats that could be modified to serve U.S. consumers in densely-populated markets.

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Post-election outlook shifts to: Expect worse, hope for best

BY CSA STAFF

NATIONWIDE RT REPORT —During a year in which predicting retail performance for the all-important holiday selling season has begun to resemble a game of pin the tail on the donkey, a blindfold is only one of the challenges now facing sales forecasters. Much like an anxious donkey with an acute case of A.D.D., the economy keeps jumping up and down, and with it goes the mood of many forecasters—one day talking of Armageddon, the next day pointing to signs of hope.

Bringing a slight ray of optimism to the picture are two important factors that have suddenly surfaced: the precipitous drop in fuel costs, both at home and at the pump, and the recent resolution to the presidential election, which many believe has been the greatest contributing factor over the last 18 months to indecision and lack of consumer confidence.

The fact that fuel costs, long considered a bellwether of consumer spending potential, are even mentioned in economic circles these days hinges on the sudden and dramatic effect they are having on consumers’ pocketbooks. Where the national average for a gallon of regular, unleaded gas ran as high as $4.11 at the height of the summer travel season back in mid-July, the current national average (as of Oct. 30) is down more than 37% to $2.55, and is expected to continue to drop. For the millions of Americans who rely on their vehicles each day, especially those who have grown accustomed to budgeting $4-per-gallon fuel expenses, this economic dynamic equates, simply, to more cash in hand.

However, other elements fighting for mindshare of the consumer psyche these days include joblessness, personal savings and the much-maligned federal economic bailout, which have led to an all-time low in consumer confidence last month, as reported by the Conference Board. In October, the group reported that confidence had dropped to 38 basis points, down from 61.4 in September (the survey’s baseline of 100 was set in 1985).

Many economists have speculated, however, that this consumer trepidation is only partially attributed to real fear. Instead, they point to the presidential election, particularly the campaign rhetoric, which essentially bombarded voters with a message about how bad things have become. “It’s badly broken,” both candidates chimed, “And I’m the man to fix it.” It stands to reason, therefore, that with the election over, that message will now change considerably, shifting from one of negativity to one of constructive, pro-active planning. And this, the thinking goes, will alleviate, if for nothing else, the indecision that has occupied consumers’ minds.

In late October, for example, when many reputable national polls reported that Barack Obama had taken a sizeable, mostly insurmountable lead over John McCain, consumer confidence began to stabilize ever so slightly, and at least in one case, it began to show improvement. According to the weekly ABC News Consumer Comfort Index, which uses a scale of -100 to +100, consumer confidence for the week immediately prior to election week saw a slight uptick in confidence (to -49, from -50), and despite all of the negative economic news, did not drop under its record low of -51 set in May, when news of rising fuel prices dominated the news.

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