SAGE Advice: Holiday Spending Watch 2007 -- Silent Cash Registers

By: Leo J. Shapiro, Erik Shapiro and Steve Yahn Although retailers pulled out all the stops to promote spending by advertising price discounts in newspapers starting before Halloween, our Leo J. Shapiro and Associates national poll finds the percent of consumers planning to spend less this holiday season than last rising ten points to 52% in November, from 42% in October. The percent planning to spend more plunges ten points to 19%, from 29% in October.

Day-to-day spending is also down. The percent of consumers who report spending freely for clothing drops six points to 45% in November, from 51% in October.

This mounting cutback was bumped a notch by fears of inflation and recession, together equaling stagflation. The Shapiro survey finds consumer concerns with inflation jumped nine points to 80% in November from 71% in October reaching the highest level of inflation fearers since June of this year. And the percent of consumers who say their income has decreased in the past month rises to 21% in November, from 15% in October.

As ghosts of the previously exuberant credit market schedule holiday visits, the percent of consumers reporting having trouble keeping up with their mortgage and home equity loans doubles to 9% in November, from 4% in October.

The Shapiro Consumer Balance Index (CBI) plunges to 93 in November, from 100 in October. The CBI tracks consumer concern with their ability to keep their heads above water. To bring their spending in line with what they feel will be their ability to spend, consumers are bailing on holiday spending in an effort to keep from sinking beneath increasingly turbulent waters that are stirred by rising oil prices, falling housing prices, job worries, and a stock market that leaps about capriciously ? like a young goat.

Bottom Line
Newspapers stand a chance to maintain advertising income because of the cutthroat competition between retailers this season.

Newspaper ad sellers are sagely advised to help retailers clear their inventories of Christmas goods ? but to encourage retailers to do so in a fashion that gives joy to consumers hard pressed to buy gifts.

One idea is a frequent buyer program, where newspapers help stores promote a program where gift buyers receive points ? perhaps for ten percent of sales ? that are redeemable after January 1 for every dollar spent at a store before December 25.