Consumers Expect to Increase 2011 Holiday Spending in Spite of Pessimism on the State of the Economy According to New Research Conducted by Auriemma Consulting Group

    NEW YORK, Dec 09, 2011 (BUSINESS WIRE) — The holiday spending season was off to a brisk start, confirmed by the National Retail Federation (NRF) statistics, which reported that the 2011 Thanksgiving weekend set retail sales records, with total spending topping $52.4 billion. But with the kickoff to the holiday season now officially over, retailers, economists and policy-makers alike, are left wondering what we can realistically expect the 2011 holiday season to look like when it’s all finished? Indeed, skeptics contend that most of those early sales were fueled by longer store hours, more generous discounts, and free shipping in the online retail space, few of which are sustainable, long-term retail strategies.

    Tracy Mullin, the NRF’s president and CEO acknowledged the uncertain retail outlook, when she stated that, “Holiday sales are not expected to continue at this brisk pace.”

    Only time will tell, but according to the latest research from Cardbeat(R), a syndicated market research report published by Auriemma Consulting Group (ACG), a majority of U.S. consumers are actually planning to increase their 2011 holiday spending by nearly one-third, planning to spend an average of $601 compared to $454 in 2010.

    This comes in spite of general consumer pessimism on the outlook for the U.S. economy as a whole. For example, 81% of the same respondents believe that the U.S. economy has not improved at all during the past two years, while nearly 40% say their personal financial situation has actually gotten worse. Yet most consumers still say they plan to increase their holiday spending.

    There are several possible explanations for the apparent dichotomy.

    First, the U.S. consumer market is eroding into an hourglass shape, with more migrating into the high and low ends. Many consumers in what remains of the middle and the low-ends of the market appear willing to trade down on everyday essentials in order to splurge on discretionary purchases, including holiday gift-giving. Indeed, sales growth for store-brands has consistently outpaced the sales growth for national brands since early 2008. Second, affluent consumers are expected to outspend their mass-market counterparts ($701 vs. $601) on holiday gift-giving, pushing the average higher.

    Dr. Patricia Sahm, Managing Director at ACG explains “Many consumers seem willing to make personal sacrifices to ensure they’re able give the perfect gift, while the affluent will continue spending on luxury goods without interruption.” Collectively, both factors help to explain this behavior.

    As for retailers, Dr. Sahm says there are also some positive signs heading into the New Year. Notably, store-brands tend to have significantly higher profit margins, so while holiday sales may lure consumers into the stores, having attractive and exclusive store-brands may help to keep them coming back.

    Cardbeat research data was gathered using a web-based survey recently administered to 407 credit card users in the U.S. during the month of October 2011. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ±5%.

    About Auriemma Consulting Group

    Auriemma Consulting Group (ACG) is a full-service management consulting firm serving the payments, lending and retail industries since 1984. Cardbeat is ACG’s syndicated market research study of credit cardholders, conducted monthly in the U.S. and quarterly in the U.K. ACG also conducts research in the debit and prepaid space, and publishes a quarterly report known as The Debit Report. With offices in New York and London, ACG consultants are experienced practitioners, drawn from the credit card, private label, auto finance, mortgage, and retail banking industries that we serve. For more information, please contact Dr. Patricia A. Sahm at 212-323-7000 or patricia.sahm@acg.net.

    SOURCE: Auriemma Consulting Group