Poll: Holiday Shopping Not Likely to Make the Season Bright for Retailers, As Nearly Two-thirds of Consumers Plan on Spending Less This Holiday Season than Last Year
RIVERWOODS, Ill.--(BUSINESS WIRE)--Dec. 10, 2008--The Discover U.S. Spending Monitor slipped to 79.7 in November, falling
below 80 for the first time in its history, as consumer economic
sentiment fell to a record low and concern over personal finances
reached record highs. Heading into the holiday season, consumers
temporarily reversed course on spending from previous months, with an
increasing number planning on spending more in December. But the results
of nightly surveys of random consumers during November painted a dark
picture for retail activity at the onset of the important holiday
shopping season. Continued concerns over the economy and personal
finances have many more consumers preparing to spend less on holiday
shopping than they did last year.
Record Number of Consumers Give the Economy Poor Marks
Sixty-four percent of consumers rated current economic conditions as
poor, a record high and a near 30-point increase from a year ago.
Consumers did shift their views somewhat on their outlook for the
economy with 69 percent saying things were getting worse, 3-points below
October's reading. For the second consecutive month, not a single income
group appeared to be immune from the pessimism inflicted by current
economic conditions. More than 60 percent of consumers in all three
income groups polled (under 40k, 40k-75k, over 75k) rated the economy as
"It is worth noting that virtually every demographic segment covered by
the Monitor is feeling the impact of the crisis in the country's
financial affairs," said Margo Georgiadis, executive vice president and
chief marketing officer for Discover Financial Services. "Americans at
every income level and age, married or not, with kids or not, appear to
be unified in their view of the economy: it's poor."
As pessimism has worsened, economic conditions appear to be taking a
toll on consumers' personal finances. A record high 62 percent of
consumers rated their finances as fair or poor in November and 56
percent reported that their finances were getting worse, which is also a
Despite increasing concern over their finances, a majority (51 percent)
of consumers continue to have money left over after paying the monthly
bills. This is the eighth consecutive month this number has been over 50
percent. But of those who do have money left over, the number saying
they will have the same or more money left over dropped to 77 percent,
nearly two points below October's number and the first drop we have seen
in five months. Furthermore, the number of consumers expecting an income
shortfall or added expense in the coming month increased for the first
time in five months to 40 percent.
One reason for the expected added expense and drop in money left over
may be that an increasing number of consumers are planning on spending
more in December. From October to November, the number of consumers
expecting to spend more in the month ahead increased 7 points to 34
percent. Anticipated holiday spending may have something to do with the
increase, but when comparing numbers to 2007, there is actually double
the number of consumers planning to spend less in December than there
were last year. This comes as consumers expect household expenses to
decline, hitting a 14-month low.
Consumers Reluctant to Increase Discretionary Spending Despite 4-Year
Low in Gas Prices
The Monitor reported that 35 percent of consumers expected to pay more
in household expenses in December. This number is 23 points below what
was reported in November 2007, but despite the drop (Gasoline prices
have fallen to levels not seen since 2004), consumers are reluctant to
increase their discretionary spending. From October to November
discretionary spending, like going out to dinner or spending on a
vacation, edged up only slightly. But when compared to November 2007,
the number of consumers planning to spend less on discretionary
purchases is up 7 points. Some other numbers include:
- Fifty-two percent planning to spend less on discretionary purchases like
going out to dinner or the movies, up seven from November 2007
- Fifty-two percent planning on spending less on home improvement
purchases, up seven points from November 2007
- Nearly 50 percent (49%) planning on spending less on major personal
purchases like travel or a gym membership, up 7 points from November
"Even though consumers are far less burdened by household expenses than
they were a year ago, a majority of them are actively spending less in
all discretionary categories," said Georgiadis. "Poor economic
conditions and concerns over personal finances have ruled out any
possible spending increases for most consumers."
Consumers Planning to Spend Less This Holiday Season and Shopping
The restraint consumers have applied towards their spending also is
reflected in their holiday spending intentions. The numbers show:
- Sixty-three percent plan on spending less this holiday season, an
11-point increase from 2007 (52 percent).
- Nine percent plan on spending more this holiday season, 7-points lower
than November 2007 (16 percent).
Consumers also seem to be taking advantage of holiday sales a little
earlier this year. November numbers showed that 42 percent of consumers
have at least begun their holiday shopping. This compares to 39 percent
who said the same thing in Nov. 2007.
"Consumers have approached holiday spending this season with far more
caution," said Georgiadis. "This is not good news for retailers who rely
on holiday spending for the bulk of their profits."
For more Discover U.S. Spending Monitor survey data, charts and
information, please visit www.discoverfinancial.com/surveys/spending.shtml.
About Discover U.S. Spending Monitor
The Discover(R) U.S. Spending MonitorSM is a monthly
index of consumer spending intentions and capacity that is based on
interviews with a random sample of 15,000 U.S. adults conducted at a
rate of 500 per night. In addition to spending, the survey asks
consumers their opinions on the U.S. economy and on their personal
finances. Weekly reports reflect calculations for the seven previous
days of interviews, or a sample of 3,500 adults. The Monitor began in
May 2007 with a base index of 100. Surveys are conducted by Rasmussen
Reports, an independent survey research firm (www.rasmussenreports.com).
About Discover Financial Services
Discover Financial Services (NYSE: DFS) is a leading credit card issuer
and electronic payment services company with one of the most recognized
brands in U.S. financial services. The company operates the Discover
Card, America's cash rewards pioneer. Since its inception in 1986, the
company has become one of the largest card issuers in the United States.
Its payments businesses consist of the Discover Network, with millions
of merchant and cash access locations; PULSE, one of the nation's
leading ATM/debit networks; and Diners Club International, a global
payments network with acceptance in 185 countries and territories. For
more information, visit www.discoverfinancial.com.
CONTACT: Discover Financial Services
Source: Discover Financial Services