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Holiday shoppers may defy spending predictions, economics professor says

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By Ben Sutherly and Tim Tresslar
Staff Writers Updated 6:44 PM Wednesday, November 25, 2009

With unemployment high and consumers still fretting the economy, the big question for retailers remains: Just how much will people spend on the holidays?

Though consumers generally have tightened their belts, Robert Premus, an economics professor at Wright State University, said that if they have been saving up for the holidays, consumers could cut loose with extra spending during the holiday season.

“You might see stronger sales than the economy might predict,” he said.

Deloitte & Touche in a survey conducted Nov. 19-22 found that 30 percent of respondents had raised the amount they plan to spend on holiday gifts versus what they had anticipated a month or more ago. An  earlier survey by Deloitte had found the average consumer will spend $534 on gifts this year, down 1 percent from $541 in 2008.

Ed Bentley, partner with Deloitte & Touche LLP and regional chief of its retail practice, said merchants who want a successful holiday season need to focus on two things — getting the consumers’ attention and making sure stores have enough staff on hand to adequately serve customers. Retailers, who have kept their inventories under control, also should consider issuing rain checks to customers if they don’t immediately have a piece of merchandise on hand, Bentley said.

Irene Dickey, a lecturer at the University of Dayton’s School of Business Management, said consumers started hunting for deals earlier than usual.

“There’s a lot of optimism out there as far as the economy turning the corner, but consumers are leery of too much spending,” she said.

How well stores fare this year also will depend on what they sell. Frank Badillo, senior economist with Retail Forward, a Columbus-based market research and management consulting firm, said apparel retailers are expected to enjoy brisker sales growth not only because clothes cost less than other merchandise catergories, but also because consumers have put off clothes purchases for some time, creating pent-up demand.

On the other hand, merchants that sell home improvement products, furniture or home goods likely will grapple with slower sales than other retailers, he said. Department stores, which sell clothes and home goods, will have a tough season, he said.

“They’re really taking it on the chin relative to other channels,” Badillo said of department stores. “We expect they’re going to post declines into the holiday as well.”

Amy Haverstick, co-owner of Jay’s Seafood Restaurant, said the number of reservations at her Dayton restaurant remain about the same as they were a year ago. And, while some companies have cut back on providing holiday lunches for employees, workers haven’t necessarily abandoned the tradition of holiday parties.

“They still want that time away from the office,” she said. “They still want to celebrate.”

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