The Holiday Shopping Season Is Here – Will It Give Retailers a Much Needed Boost?

So, what could this mean for the normally healthy, holiday shopping season? In our view, seasonal retail shopping will likely be anemic. Evidence from recent surveys indicates consumers intend to use cash for their holiday shopping expenditures this year at a much higher rate than in the past. This from bills.com on November 3, 2009 (highlighting once again mine):

A recent report shows that consumers are planning on minimizing credit card debt during this holiday season.

According to the Biz Beat blog from the Atlanta Journal-Constitution, which cited a survey from the National Foundation for Credit Counseling, 68 percent of consumers plan on using cash for their Holiday shopping this year.

Furthermore, the 12 percent of respondents who said they would use a credit card for their purchase said they would pay off the debt in full.

“Another 10 percent would charge purchases and pay them off over time,” the blog noted. “The final 10 percent plan to use layaway programs.”

Layaway programs have gotten more popular of late, with many retailers bringing them back as consumers look to shopping strategies that will help with debt relief. For example, retailers like Kmart and Sears have increased the presence of their layaway programs on their websites. Consumers can make purchases on the websites and then have it held at a local retail location.

Some consumers are also planning on spending less this year. According to a survey from Consumer Reports, 65 percent of respondents said they would not spend as much on the holidays this year, which would include cutting back on gifts and traveling.

Let’s analyze those projected numbers.

68% will use cash for their holiday purchases, 12% will use credit cards and then pay the outstanding balances in full, and 10% will us layaway programs. That’s 90% of the holiday shoppers who will not use credit to finance their purchases and/or travel.

Only 10% of holiday shoppers will likely use credit cards and make monthly payments after the holidays. That can’t be good for retail, the consumer spending dependent US economy, or employment.

Look for a slow retail season.

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