Stores stock slightly costlier gifts for Black Friday
The flashy sweater is replacing the basic winter coat, jewelry is starting to sparkle again, and the gift card for gasoline is being trumped by the gift card at the mall. Black Friday displays are being loaded with fancier laptops, bigger TVs and deluxe gym sets, though stores acknowledge shoppers will buy only if it’s a good deal.
The cautious optimism comes as more Americans are feeling more secure financially and spending a bit more on nonessentials.
Still, there are nearly 15 million unemployed, and concerns about job security still cloud consumer confidence. Spending is picking up but has not returned to pre-recession levels.
Patti and Bob Marucci of Sewell, N.J., are preparing to spend more, though their finances haven’t changed that much.
“I was able to not touch my Christmas club money, I guess you could say,” Patti Marucci said. The couple, both in their 40s, was looking at $400 TVs at a Walmart store in Deptford, N.J., on Tuesday.
Spending on discretionary items like clothing and home furnishings fell to 61 percent of total dollars spent last year. That should rise to 63 percent this year, about the same as 2008, according to estimates by Craig Johnson, president of retail consultancy Customer Growth Partners. It was 65 percent during the credit-fueled binge from 2000 to 2005.
Given a $3.3 trillion retail market, excluding cars and gas, that extra two percentage point difference this year translates to an extra $60 billion up for grabs.
The fierce retail battle for a piece of that pie means big discounts for those who have money to spend.
Still, Americans are being purposeful and are expected to look for deals and stick to lists. In fact, shoppers are expected to keep paring down the number of gifts to 16.8 from 18.2 in 2009, according to Deloitte Research. But Deloitte also expects shoppers to spend more overall. That means presents this year should be a little nicer.
“Last year, people were giving toasters, and pots and pans,” said Kathy Grannis, a spokeswoman at the National Retail Federation, the retail industry’s trade group. “But now you’ll see shoppers buying a little nicer gift. that set of candles or a nice set of hat, gloves and scarf.”
Stores aim to draw in both those splurging a bit and those just getting by.
Deep discounts on high-end cameras, laptops and other gadgets are featured in major retailers’ Black Friday ads alongside lower-priced boots, jeans and underwear.
Retailers had a solid start to November, fueled by early discounting. MasterCard Advisors’ SpendingPulse, which tracks spending across all transactions including cash, reported spending increases in clothing (up 9.7 percent), luxury goods excluding jewelry (up 6.7 percent) and jewelry (up 8.1 percent) from Nov. 1 through Nov. 13 compared with a year ago.
Jewelry, vulnerable to cuts in discretionary spending, is starting to recover.
The improving sales have caused some research groups like ShopperTrak, a research firm, to upgrade its holiday growth forecast to 3.2 percent from 2.9 percent.
Nevertheless, “this is not pre-recession spending,” said James Russo, vice president of global consumer insights at The Nielsen Co. “We are not there yet, but stores do have the attention of the shopper.”