Retailers are likely to see Christmas and Hanukah gift spending by affluent consumers at or below the levels of 2009 expenditures according to a new survey of the wealthiest 10% of US households by the American Affluence Research Center (AARC).
In the AARC Fall 2010 Affluent Market Tracking Study #18, which is representative of the 11.4 million households that account for about half of all consumer spending, about 12% of affluent consumers said they will not buy any gifts for this holiday season. According to numbers from a National Retail Federation survey of the general public, the overall average of consumers who do not plan to buy holiday gifts is 8%. It would appear the affluent consumers are once again proving to be careful spenders.
Among affluent consumers planning to buy holiday gifts, about 3% said they will spend an average of 7.7% more than they spent in 2009. This is in line with numbers from an NPD Group market research survey showing that 9% of the general public (not specific to the affluent market) plan to spend more this holiday season. According to a study by American Express Publishing/Harrison Group, only 5% of consumers with a household discretionary income of $100,000K or more plan to increase their holiday spending this year.
About 28% of the affluent market respondents in the AARC survey said they plan to spend an average of 14.9% less for holiday gifts than they did in 2009. This number is also consistent with NPD data on the general population showing about 30% planning to spend less in 2010 than they did in 2009. The American Express number for reducing holiday expenditures is 21%.
The remaining 69% of affluent consumers in the AARC survey plan to spend the same as they did in 2009. Total holiday gift purchases by the affluent consumers is likely to average $2,305 in 2010, an overall average 3.9% decline from the average of $2,399 that affluent consumers say they spent in 2009. The American Express Publishing/Harrison Group study estimated the consumers represented by their survey will spend about $2,093 on gifts this year. 53% of this group is looking to reduce the number of gifts they buy. The National Retail Federation predicts an average spend of $518 per adulton gifts by the general population represented by their October poll.
Given that consumers often spend a bit more than they planned, especially during the holiday gift season, the American Affluence Research Center believes total spending by the affluent could be the same or perhaps slightly better than what it was in 2009. This is also consistent with Deloitte’s prediction of a 2% rise in holiday spending and Nielsen’s prediction of a flat holiday season relative to 2009. On the bright side, while it may not be a banner year for retailers, it may not be worse than last year. The American Affluence Research Center’s national survey included 439 affluent men and women with an average of $290,000 household income, $3.1 million average household net worth, and $1.1 million average value of their primary home.