A Christmas not even the Grinch would love - 1991 holiday retail trade projections, Grinch, fictitious character

Discount Store News, Nov 4, 1991 by Pete Hisey

It looks like the economy just mugged Santa Claus. And for retailers who suffered through a nail-biting holiday season last year, that is truly bad news.

According to two independent surveys conducted in mid October, Americans plan to spend less this Christmas season than they did last year, with overall household spending expected to dip 3.6%.

Projected Holiday Spending:  1991 vs. 1990
% of Consumers Who      % of Consumers Who
Will Spend Less Than    Will Spend More Than
  in Previous Year       in Previous Year
       1991      1990          1991   1990
Aug.   40%       34%    Aug.   30%    32%
Sept.  44        36     Sept.  22     34
Oct.   47        44     Oct.   24     28

According to a telephone survey of 500 households conducted by Lincoln, Neb.-based Fairfield Research, only 15% of consumers plan to spend more than they did last year, and 25% said they will spend less. Total household gift spending will dip from $772 last year to $744 this year, a 3.6% drop.

Leo J. Shapiro and Associates, a Chicago-based marketing research firm, found an even grimmer set of households. According to Shapiro chief executive officer George Rosenbaum, nearly half (47%) of shoppers said they will spend less this year, while only 24% said they will spend more. The percentage saying they will spend less had risen substantially each month since August, when 40% planned to spend less, and the difference between results this year and last year was remarkable. Last year, for instance, only 34% said they would spend less when asked during August. 1992 Consumer Purchase Projections

                          No. of Units
Product                   (In Millions)
Component audio                5.6
CD players                     9.3
Computers                      6.5
Big screen TV                  6.5
VCR                            8.4
Video game system              8.4
Video game cartridges         69.8
PC Software                   26.9
Prerecorded video            168.2

Like last year, that will force retailers to start cutting prices earlier (and deeper) than usual, and price wars are almost inevitable. Rosenbaum is already seeing signs that retailers will be forced to "seek out new and innovative ways to encourage consumers to shop now; Child World's price guarantee is a good example. When consumers see price cutting, it makes them even more tentative about going into a store. They figure if they wait another week, the price will be even lower, or a competitor will undercut the best price."

Fairfield Research chairman Gary Gablehouse found a few bright spots in an otherwise dismal picture. Video game systems and software are high on shoppers' lists, probably spurred by the introduction of Nintendo's Super NES and the continuing success of Sega's Genesis, and personal computers and software also appear to have a bright holiday forecast. Large screen televisions should be hot (a trend from last year is buying one large present for the entire family), and prerecorded video titles, spurred by the release of hits like Fantasia and Terminator II, are projected to blow off the shelf. Of course, that might have as much to do with the relatively modest selling price of recent hits (many for under $20) as with any intrinsic desire for more prerecorded video.

Rosenbaum did not see any silver lining at all. "It's dismal all over," he said. He expects to see a rerun of last year, when consumers waited until the last minute to shop, which caused retailers to lose sales twice; once in early December, when no one showed up to shop, and again shortly before Christmas, when massive out-of-stocks on high-ticket goods like computers and big screen television cost retailers dearly.

If these surveys are accurate reflections of consumer spending, even the Grinch wouldn't touch this Christmas.