FINANCE

Survey: Four-in-10 consumers to spend less this holiday season

BY Dan Berthiaume

New York – Nearly four-in-10 Americans (38%) plan to spend less this holiday season than they did last year, while 14% plan to spend more this year and 47% plan to spend about the same amount as last year. According to a new Bankrate.com report, Americans planning to spend less outnumber those planning to spend more in each age and income group.

The disparity increases with age. Households with income less than $50,000 are the most likely to say they plan to spend less this year. However, Americans’ feelings of financial security are now at their highest level since August. They are in positive territory for each age group younger than age 65. Overall, 25% of Americans feel better about their finances than they did last year and 18% feel worse.

Bankrate.com’s Financial Security Index registered a 100.4 in December; readings above 100 indicate improved financial security compared with one year previous. The index dipped into negative territory in September, October and November, due in large part to the uncertainty in Washington.

Feelings of job security turned positive in December for the first time since September, completely unwinding the negative sentiment of the past two months. Net worth continues to be a strong area of financial security: those reporting higher net worth than one year ago outnumber those reporting lower net worth by a margin of three-to-two.

Savings is the only area of financial security that has elicited negative feelings every month since the poll debuted in December 2010.

The survey was conducted by Princeton Survey Research Associates International (PSRAI)

“Many Americans continue to struggle with little or no savings and stagnant wages, forcing them to rein in their spending this holiday season,” said Greg McBride, CFA, Bankrate.com’s senior financial analyst. “Overall, Americans are feeling more financially secure after the government shutdown and debt ceiling saga were resolved, but many are still clutching their pocketbooks closely.”

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SUPPLY CHAIN

RSR Research: Retailers must adapt supply chain to omni-channel model

BY Dan Berthiaume

Walnut Creek, Calif. – Most retailers have yet to adapt their supply chains to the emerging omni-channel retail model. According to a new report from RSR Research, “Supply Chain Execution 2014: Making Omni-channel Profitable,” although most retail supply chains are only designed to fulfill the store channel, store is the third-most-common channel slated for retailer investment in the next three years (67%), with online/e-commerce (82%) and mobile commerce (70%) ahead.

However, when asked to name their top three supply chain execution challenges, retailers recognized the importance of omni-channel. The most popular challenges were consumers expect a more seamless omni-channel experience (73%), the pattern of consumer demand and how retailers fulfill it has changed (67%), and competitive pressures create shorter order cycles (58%).

In addition, the report finds that mid-tier retailers with annual revenue of $250 million to $1 billion are much more likely than retailers with $1 billion or more in annual revenue to cite omni-channel supply chain inhibitors such as supply chain not designed to support omni-channel fulfillment (86% mid-tier 68% large), lack of coordination between supply chain, merchandising and marketing (57% mid-tier 42% large) and lack of inventory accuracy (43% mid-tier 40% large).

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FINANCE

Report: Gift card sales in 2013 to top $118 billion

BY Dan Berthiaume

Arlington, Va. — Sales of gift cards in 2013 are expected to surpass $118 billion in sales, an 8% increase from 2012. CEB Tower Report research suggests that the widespread adoption of e-gifting, which experienced rapid growth from $300 million in 2012 to a predicted $3 billion in 2013, will provide scale for continued industry gains through 2016.

In addition, open network branded cards grew from $41 billion to $44 billion, retailer card volume grew from $36 billion to $39 billion, and restaurant and miscellaneous segments held flat at $19 billion and $13 billion, respectively.

CEB predicts the e-gifting trend will help propel continued growth in the gift card market in excess of $140 billion in sales by 2016. E-gifting is expected to top $10 billion during the same period, filling a niche for customers seeking to simultaneously buy and send their gifts to recipients they may not see in person over the holidays. Analysis suggests little overlap between e-gifting and traditional gift card segments though, as the latter rely on the physical presentation of a gift as a primary selling point.

However, CEB says new P2P services from banks and non-traditional financial players such as PayPal, which can be utilized for gifts and may begin to cut into gift card volume, should be of greater concern to traditional card issuers. The new services offer the ability to send gifts in real time through proprietary networks, circumventing the traditional card issuer’s spheres.

Innovations related to e-gifting and P2P services are expected to contribute to the decline of unused gift card value, or "spillage." The spillage figure now stands at an estimated 1% of total gift card value spend, down from a high of nearly 10% when CEB began studying gift card trends in 2006.

"The gift card experience continues to get better for consumers," said CEB TowerGroup senior research director Brian Riley. "E-gifting and P2P innovations add a new dimension to the market, which means more flexibility for buyers and recipients. Those same innovations may pose a threat to the growth of traditional card volume, and issuers should remain nimble in adjusting their strategies as digital competitors continue to enter the market.”

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