Expectations for weak holiday spending could be overblown, based on responses by 2,570 Americans with household incomes over $35,000 to a survey fielded last month by The Boston Consulting Group (BCG).
CHICAGO (Business Wire EON) November 15, 2007 --
Expectations for weak holiday spending could be overblown, based on
responses by 2,570 Americans with household incomes over $35,000 to a
survey fielded last month by The Boston Consulting Group (BCG).
“The doom and gloom is overstated.
Unemployment is low. Real incomes are healthy,”
said Michael J. Silverstein, a BCG senior partner and author of
the bestselling Treasure Hunt: Inside the Mind of the New Consumer and
Trading Up: The New American Luxury. “Consumers
overall predict that this holiday season will be just as good, if not
better, than last.”
“There are always exceptions. There is
significant economic stress due to rising energy and commodity prices;
mainly for households with incomes under $35,000. Middle-income
consumers tell us they are optimistic about their futures and secure in
their financial position.”
Holiday Spending Plans Are Similar to Those a Year Ago
Fourteen percent of Americans say they’re more
likely to make a major purchase in the next three months and 36% of
consumers said they were less likely to make a major purchase. The rest –
50% – said their spending would be unchanged.
In last year’s survey, 23% said they would
spend more, but 32% said they would spend less. In 2005, 40% said they
planned to cut spending. (23% said they would spend more.)
Americans Say Weaker Housing Market is Not Changing Their
Spending Habits
The vast majority of Americans – 74% –
say fluctuations in housing prices haven’t
changed their spending habits compared to last year. Only 17% say they
spent less this year because of the real estate market.
In 2006, Americans were actually more apt to say real estate
fluctuations were affecting their spending. Twenty-two percent said they
would spend less because of house price volatility, and 67% said plans
would be unaffected.
Posed with the question whether a 10% drop in housing values next year
would impact their spending, more than three-quarters of Americans (76%)
said it would not. In 2006, only 71% said it would not.
Further, most Americans – 51% –
say they don’t feel affected by the current
credit market, e.g., turbulence in mortgage rates and loan rates. In
fact, an additional 16% say they don’t even
think about the current credit market. (26% of Americans do say they
feel somewhat squeezed by the current credit market. 7% feel very
squeezed by the current credit market.)
In General, Americans Report Feeling Financially Secure
Nearly three-quarters (73%) of Americans said they currently feel very
(19%) or somewhat (54%) financially secure right now. However, 5% did
say they feel that they’re in financial
trouble.
In the same vein, 70% of Americans say they feel secure in their current
job.
Consumers Still Plan to ‘Trade Up’
to Higher Quality in Certain Spending Categories
“Trading up” to
better products remains a strong part of American spending patterns,
according to the survey. The top categories for trading up over the
coming year will be personal computers, travel/vacations, bedding, meat,
sit-down restaurants, kitchen appliances, the home in general, cars,
furniture and home entertainment products.
“To trade up, people often trade down –
find valuable bargains, that is – in other
categories. American shoppers demonstrate smarts –
in almost any economic environment. They have figured out retailers’
promotional cadence. They are forcing stores to launch pre-emptive
sales. It’s definitely a season to be jolly
about the good values that will be out there early and often. It’s
a good time of year to be a consumer,” said
Mr. Silverstein.
Survey Methodology
This Household Spending survey was conducted online within the United
States by Harris Interactive on behalf of BCG between October 10 and
October 23, 2007 among 2,570 US adults ages 18+ who have annual
household incomes of $35,000 or more, of whom 2,060 have annual
household incomes of $50,000 or more. Results were weighted as needed
for age, sex, race/ethnicity, education, region and household income.
Propensity score weighting was also used to adjust for respondents’
propensity to be online.
All sample surveys and polls, whether or not they use probability
sampling, are subject to multiple sources of error which are most often
not possible to quantify or estimate, including sampling error, coverage
error, error associated with nonresponse, error associated with question
wording and response options, and post-survey weighting and adjustments.
Therefore, Harris Interactive avoids the words “margin
of error” as they are misleading. All that
can be calculated are different possible sampling errors with different
probabilities for pure, unweighted, random samples with 100% response
rates. These are only theoretical because no published polls come close
to this ideal.
Respondents for this survey were selected from among those who have
agreed to participate in Harris Interactive surveys. The data have been
weighted to reflect the composition of the U.S. adult population.
Because the sample is based on those who agreed to be invited to
participate in the Harris Interactive online research panel, no
estimates of theoretical sampling error can be calculated.
Note: All questions reflect U.S. adults aged 18 and over with annual
household incomes of $50,000 or more unless otherwise noted.
About Michael Silverstein
Michael Silverstein joined The Boston Consulting Group in 1980. He is a
senior partner in BCG’s Chicago office and
until recently was global leader of BCG’s
Consumer practice. He holds an MBA with distinction from Harvard
University and a BA from Brown University.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm
and the world’s leading advisor on business
strategy. We partner with clients in all sectors and regions to identify
their highest-value opportunities, address their most critical
challenges, and transform their businesses. Our customized approach
combines deep insight into the dynamics of companies and markets with
close collaboration at all levels of the client organization. This
ensures that our clients achieve sustainable competitive advantage,
build more capable organizations, and secure lasting results. Founded in
1963, BCG is a private company with 66 offices in 38 countries. For more
information, please visit www.bcg.com.
About Harris Interactive®
Harris Interactive is the 13th largest and one of the fastest-growing
market research firms in the world. The company provides innovative
research, insights and strategic advice to help its clients make more
confident decisions which lead to measurable and enduring improvements
in performance. Harris Interactive is widely known for The Harris Poll,
one of the longest running, independent opinion polls and for pioneering
online market research methods. The company has built what it believes
to be the world’s largest panel of survey
respondents, the Harris Poll Online. Harris Interactive serves clients
worldwide through its North American, European and Asian offices, and
through a global network of independent market research firms. More
information about Harris Interactive may be obtained at www.harrisinteractive.com.
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