The zeal for a deal is driving consumers to new levels of holiday discount hunting.
Lingering concerns about the health of the economy have shoppers tightening their spending and searching even harder than last year for bargains on gifts.
“The American consumer has become much more discount-oriented than ever before,” said retail analyst Ken Perkins of Retail Metrics. “Consumers have been in a pretty sour mood — not optimistic about the economy and their own personal financial situations.”
Just how deal-conscious are shoppers? Enough that 55 percent of surveyed consumers said they may purchase a holiday gift through an online group-buying site such as Groupon or LivingSocial, according to Discover Financial Services.
A year ago, just 22 percent said they would consider the group promotions.
The drive for discounts that accelerated after the 2008 recession persists this year as unemployment rates have declined only marginally and U.S. household incomes have fallen an average of 6.7 percent since 2009.
“It’s bleak,” said Patricia Ciamfarini, shopping recently at a Denver Kmart. “Gift-buying is pretty much not happening this year. I had thought that things (economically) would be settling into place, but it’s still really tough.”
The 60-year-old employee of a cyber-security firm said she will target her holiday spending by offering to pay her nieces’ and nephews’ cellphone bills for a few months instead of buying store gifts.
And the budget for her big annual holiday contribution — buying toys to donate to the Toys for Tots program — will go down to about $300 this year compared with $700 last year.
Another Kmart shopper, Helena Peterson, said she’ll buy nothing without a substantial discount.
“It’s hard to cut back more from what I’ve already cut back,” she said. “But I’m going to have to stretch my dollar farther. You won’t be seeing me at Neiman-Marcus.”
The Discover Financial Services survey of 1,000 consumers nationwide showed that 44 percent of shoppers will limit purchases to items that have “deep sales,” up from 35 percent last year.
Fifty-five percent said they will seek special incentives such as free shipping.
“Today’s shoppers are just savvier than ever,” said Sarah Alter, a Discover vice president. “It’s been a tough few years. They expect and need to see value in everything they buy.”
The National Retail Federation is forecasting an overall 2.8 percent increase in sales to $465.6 billion. Yet on a per-capita basis, individual shoppers will spend 4.6 percent less than last year on gifts, while spending more on themselves.
Retail analyst Perkins said merchants learned a costly lesson at the onset of the recession when they were saddled with high inventories and weak sales.
Now, most retailers closely control inventory levels, he said. Yet even with reduced inventories, they have had to shave profit margins to compete for discount-seeking customers.
Perkins forecasts a “barbell” scenario for retailers, with discount merchants, including Walmart, Target and dollar stores, doing well this season, as well as high-end department stores such as Saks, Neiman-Marcus and Nordstrom.
Middle-tier retailers, including J.C. Penney and Kohl’s, may struggle, he said.
Merchants of all stripes will be rolling out discounts, competitive pricing and Black Friday promotions, said Matthew Shay, chief executive of the National Retail Federation.
“There’s no doubt we’ll all be blown away by what retailers still have in their bag of tricks for shoppers,” he said.
Steve Raabe: 303-954-1948 or sraabe@denverpost.com
