Most Americans expect to spend less or the same on the holidays this year compared with last year, a survey showed on Monday, an early sign that retailers will have to try harder to win shoppers in the biggest selling season of the year.
A whopping 82 percent of those surveyed by America's Research Group said they planned to spend less or the same as last year. Consumer spending accounts for almost 70 percent of the U.S. economy.
The question was one of several asked exclusively for Reuters as part of a larger America's Research Group survey.
More than half of those surveyed said they expected the economy to slow further before it recovers. About 51 percent said they did not feel better about their family finances versus a year earlier.
Retailers better be worried about Christmas. If half of Americans believe it is going to be worse before it gets better, they may not be too excited about buying much this Christmas season, Britt Beemer, president of America's Research Group, said in an interview.
The holiday selling season is vital for U.S. retailers as many of them make as much as a third of their annual sales in that period.
This is not the kind of number that retailers want to have going into November 1 or they are going to be in big trouble, Beemer said. They are going to have to give consumers better deals earlier.
Fewer pay raises, falling home values, rising prices for food and other goods, and political gridlock in Washington are all taking a toll on Americans, Beemer said.
Not that there is no hope at the end of the tunnel, but the light is very, very dim, he said.
Post-recession American shoppers are extremely sensitive to price and increasingly venturing beyond discount chains while hunting for bargains.
About 68 percent of those surveyed said they have now started shopping at dollar stores; 42 percent said dollar stores offered better value than discounter Wal-Mart Stores In.
That is bad news for mass merchandisers such as Wal-Mart, Target Corp, Family Dollar Stores Inc and Dollar General Corp.
Anybody who is another discounter that sells commodities is vulnerable, Beemer said. Dollar stores are attacking them at their lowest price level.
The telephone survey of 1,000 consumers was conducted September 6-8 and has an error factor of plus or minus 3.8 percentage points.
(Reporting by Dhanya Skariachan; editing by John Wallace)