Survey notes impact of election on consumer spending
New Canann, Conn. A return to divided government in January may well mark a return to the shopping malls, according to consulting and research firm Customer Growth Partners (CGP), New Canaan, Conn. The impact on consumer spending will only slightly increase this year’s holiday retail sales, but will significantly accelerate retail spending in 2011, said CGP president Craig Johnson.
“In talking to consumers late yesterday and this morning, we are hearing -- across the political spectrum -- that a more balanced approach from Washington will make them more comfortable to open their pursestrings a bit more this Christmas, and even more so in the New Year, as job growth accelerates,” Johnson said. “As one Democratic voter told us, ‘Having two parties sharing power is strangely comforting,’ and that both his family and consumers at large were likely to spend more this holiday season and next year.”
Anticipating the possibility that yesterday’s election would return the House to GOP control, CGP conducted a brief series of focus group sessions among voting age respondents in several parts of the country, including California, Connecticut; Illinois; Kansas; New Jersey; North Carolina; and Virginia. The web-assisted sessions were conducted late Tuesday and early Wednesday morning, among registered Democrats, Republicans and unaffiliated voters.
Based on the research, CGP confirmed its holiday sales forecast of year-over-year growth of +4.5% [+/-0.5%], issued last week, but has indicated that the actual results may fall in the top half of that range.
“As we saw with the back-to-school season, which was late to develop but ended up over 4.6%, we believe that holiday 2010 will also end up ‘late but semi-great,’ with the best year-over year growth since 2005’s 6.1%,” Johndon said.
Other highlights of CGP’s consumer insight research include:
- After the election, households are still very cautious on spending, generally anticipate spending a little more this holiday season than in 2009, but will accelerate spending in 2011 as job growth returns -- and in each case will continue to focus on value.
- Although they will only marginally increase their own holiday gift-giving this year, they tend to think that consumers nationally will increase Christmas spending somewhat in the wake of the elections’ shared-power results.
- For 2011, consumers—across all political persuasions—believe that their own household will increase its spending, and that overall consumer spending will rise.
- Households also anticipate increased spending on durable goods, such as major appliances, suggesting that long pent-up consumer demand will be tapped in 2011.
CGP’s 4.5% forecast for the November-December Holiday shopping season is above consensus estimates of 2% to 3% growth (the National Retail Federation, for example, has issued a 2.3% growth forecast). However, the CGP forecast includes direct-to-consumer and e-commerce sales, which are excluded in NRF’s forecast. E-commerce sales have been the fastest growing segment of retail since the 1990’s, and in 2009 represented some 10% of total holiday sales.