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CONFIDENCE HIGH AMONG HOLIDAY SHOPPERS Bright Forecast For Retailers

 ATLANTA, Nov. 22 /PRNewswire/ -- Retailers should experience a robust holiday shopping season, according to a just-released nationwide consumer study by Arthur Andersen.
 Consumer confidence is high, with the average shopper planning to spend $745 on holiday gifts and 76 percent planning to spend the same or more than last year. The study also found that department stores are the leading place to buy gifts, cash will be favored more than credit, and consumers say their plans are not affected by recent tax increases and Clinton's economic and health care proposals.
 These findings are from the 1993 Consumer Confidence Report, conducted by the accounting and business advisory firm of Arthur Andersen. Some regional differences are apparent, with the Midwest leading the nation in optimism and projected spending and the West reporting an above average credit card usage rate.
 "These results are positive and indicate that there will be real growth in retail sales this season, meaning growth that outpaces inflation," commented Jay Scansaroli, managing partner for Arthur Andersen's retail practice. "Retailers have been predicting an improvement over last year, and these findings -- straight from the consumers themselves -- reinforce that positive outlook."
 Spending
 Three out of every four respondents reported plans to maintain or increase spending relative to last year. Of those spending more, nearly one-quarter explain that they are stepping up spending since their incomes rose during the past year. Consumer confidence may be especially high in the Midwest, since 17 percent of shoppers there plan to boost their holiday spending over last year -- that's more than the national average of 13 percent and higher than any other region.
 Plans to buy big-ticket gifts are further evidence of healthy consumer attitudes. More than half of those polled plan to buy at least one gift retailing for $100 or more. Single gifts costing at least $250 will be purchased by 18 percent, while 7 percent plan to buy gifts costing $500 or more.
 Two-thirds of those spending the same explain that they are simply buying for the same number of people or always spend the same. Nearly half of those spending more say they are buying gifts for more people this year, and apparently do not want to cut back on their price-per- gift.
 New Taxes, Clinton Proposals Having Minimal Effect
 The recently passed tax package and Clinton's economic and health care proposals will have little if any impact on consumer shopping this season. When consumers who are planning to spend less or the same were asked why, only 1 percent cited increased taxes as a factor. And when asked how the Clinton economic and health care proposals have impacted their spending plans for the season, 88 percent said they will have no effect.
 Credit vs. Cash
 The study finds two-thirds of U.S. consumers planning to use cash more than credit when purchasing holiday gifts. Cash expenditures may be strongest in the Midwest. There, three out of four consumers say they will use cash when buying gifts this season.
 Credit card usage may be strongest in the West, where 38 percent plan to use either major credit cards or store credit cards when buying gifts this season.
 Consumers earning more than $75,000 a year plan to use credit more heavily than others. Nearly 40 percent of shoppers in this income bracket will favor credit over cash, compared to only 26 percent of those earning $30,000 to $75,000. This trend is especially pronounced in the West, where 66 percent of consumers earning over $75,000 plan to use credit cards for most holiday gift purchases.
 Department Stores Surprisingly Strong
 Nearly four out of every five consumers surveyed indicated that department stores would be their primary shopping place for gifts this season. This may be surprising to many who have predicted a sales slump for this retail category.
 "The popularity of department stores is a sign of their ability to identify and respond to their customers' needs by developing successful merchandising strategies," Scansaroli explained.
 In addition, 50 percent and 42 percent indicate that they will also shop at discounters and specialty stores, respectively.
 Another noteworthy finding was the popularity of mail order: one of every four consumers surveyed said they will also shop for gifts by mail order.
 Home shopping channels may be the rage, but only 2 percent of consumers say this will be the source of their holiday purchases.
 Other Findings
 Service, price, convenience, and selection are all important to consumers. But when asked which of these is most important in influencing where they will holiday shop, nearly half of those surveyed said price. When asked which was least important, convenience was cited by 46 percent.
 While the majority of consumers are planning to do most of their shopping during the traditional Day-after-Thanksgiving to Christmas season, more than one-fourth said they will make most of their gift purchases before Thanksgiving. The number one reason they are shopping so early? To avoid crowds.
 Day-After-Thanksgiving purchases may be heaviest in the Southeast, where 6 percent of those polled said they would complete most of their holiday shopping that day -- twice the national average.
 And retailers nationwide may not see much change in crowd ebbs and flows this year, as 85 percent of consumers plan to shop at about the same time as they did last year.
 Regional Findings -- Confidence Highest in Midwest, Lowest in South Central and Pacific Northwest
 While the nation as a whole has a healthy outlook, some regions are fairing better than others. Of the study's seven regions, the Midwest, West and Northeast have the brightest outlooks while the South Central and Pacific Northwest are lagging behind the rest of the nation.
 How the Regions Rate
 (Ranked by percentage of people planning to spend more
 and by reported gift-buying budget)
 Rank Spending More Average Budget
 1 Midwest, 17.1 pct. Midwest, $817.75
 2 Northeast, 15.8 pct. Mountain, $801.34
 3 West, 14.0 pct. Southeast, $777.89
 4 Pacific Northwest, 11.6 pct. West, $775.33
 5 Southeast, 9.9 pct. Northeast, $766.50
 6 Mountain, 8.0 pct. Pacific Northwest, $720.99
 7 South Central, 8.0 pct. South Central, $712.99
 U.S. Average 13.3 pct. $745.25
 Midwest
 The Midwest is by far the strongest region, according to the survey's findings. Consumers in the Midwest have an average budget of $818, the highest in the nation. In addition, more consumers here than any other region report plans to spend more on gifts than last year -- 17 percent vs. 13 percent nationwide.
 Why are these Midwest shoppers spending more? Forty percent cite an increase in income, well above the national average of 23 percent. Eight percent say they are spending more since the economy is encouraging.
 Fewer than one-fourth of consumers here have plans to spend less than last year (only the South Central region has fewer consumers planning to spend less). Economic concerns are low even among those cutting back. Less than one-quarter of Midwesterners spending less named concern over the economy as the reason, which is lower than the national average of 28 percent.
 Midwestern shoppers may be the nation's early birds, as nearly one- third say they will complete most of their shopping before Thanksgiving.
 Three out of every four holiday gift purchases here will be made with cash or check. Consumer plans to use credit cards are at there national lowest in this region.
 West
 The West region slightly outperforms the nation in plans to increase spending. Fourteen percent of Western shoppers plan to spend more on gifts than last year, slightly more than the national average of 13 percent. The average holiday gift budget here is $775, also higher than the U.S. average of $745. Additional encouraging news is that only 23 percent plan to spend less, which is slightly lower than the nation as a whole.
 The region leads the nation in holiday credit usage. Thirty eight percent of Western shoppers, compared to less than one-third nationally, will use credit more than cash this season. In the over $75,000 income group, credit will be preferred by two thirds of shoppers, vs. only 39 percent nationwide.
 Department stores are still the number one place to shop here, but are at their lowest national popularity level. Only 72 percent of shoppers here say they will primarily shop at department stores, compared to 80 percent nationally.
 Home shopping is at its highest in the West, but is still only named as a primarily gift shopping method by 3.3 percent.
 Northeast
 The Northeast is second only to the Midwest in the percentage of consumers planning to spend more this year. Sixteen percent say they are increasing their gift expenditures here. On average, holiday shoppers will be spending $767 on gifts, which exceeds the national average of $745. Thirteen percent of consumers spending more cite being encouraged by the economy as the reason why.
 But overall, sales for the region may not rebound as strongly as retailers hope. In spite of the high percentage of people spending more, 28 percent of Northeastern shoppers are planning to spend less than last year. Of these, 30 percent cite economic concerns, 15 percent report a drop in income, and 8 percent cite a job loss as factors in this decision to cut back.
 Credit cards will account for 37 percent of holiday gift purchases in the Northeast, making it the second-strongest region for plastic. Nationwide, credit card usage is at less than one-third.
 The Northeast is the third-strongest region for department stores, which will be a primary shopping destination for 82 percent of consumers.
 According to the survey, specialty stores may have their strongest holiday sales in the Northeast. Specialty stores are the number two place to shop here, with 48 percent of consumers considering them a primary shopping spot. The Northeast is the only region where discounters are not number two.
 Mail order is a very popular option here, with just under one-third saying they will primarily shop through the mail. This is the second strongest region for mail order.
 Southeast
 The Southeast boasts the third-largest average budget for holiday gifts, $778. But the bad news for retailers is the region falls short of the national average in consumers planning to spend more.
 Some economic good news can be seen in the reasons shoppers are cutting back. There is a low reported job loss here (5.6 percent, vs. 7.3 percent nationally) and a low reported drop in income (11 percent, vs. 20 percent nationally).
 Southeastern shoppers rank very high on the generosity scale. The region leads the nation in "big ticket" gifts costing $500 or more. Nearly 1 in 10 consumers in this region will buy at least one gift in this price range.
 Day-After-Thanksgiving purchases may be heaviest in the Southeast, where 6 percent of those polled said they would complete most of their holiday shopping that day -- twice the national average.
 Mountain
 According to the survey, shoppers in the Mountain states plan to spend an average of $801 on gifts -- the nation's second-highest, behind the Midwest. Yet in spite of this apparently strong number, retailers may see a drop in sales. One quarter of holiday shoppers in the Mountain region plan to spend less, while only 9 percent plan to spend more.
 However, discounters in the region may have stronger sales than their counterparts elsewhere. Fifty-seven percent of holiday shoppers named discounters among their primary gift buying spots, well above the U.S. average of 50 percent. Outlets may not fare so well, however. Only 19 percent say they plan to shop at outlets this season, compared to 24 percent nationally.
 The region is above average in credit usage, with 36 percent preferring credit over cash.
 Pacific Northwest
 A high number of consumers planning to cut back this year -- 31 percent, vs. 24 percent nationwide -- coupled with the nation's next-to- lowest consumer budget ($721) could signal a retail slump for the region.
 Of those cutting back, 31 percent cite economic concerns and 20 percent report an income drop. The region is also the most negative toward Clinton's proposals. Twelve percent say they will spend less this year because of his plans for the economy and health care system.
 Warehouse clubs are at their strongest here, being named as a primary holiday shopping place by 29 percent of respondents, more than double the national figure.
 Specialty stores are at their weakest in the Pacific Northwest, but still are cited by two out of every five shoppers as a primary holiday shopping place.
 South Central
 Stagnant sales may be in store for South Central retailers. The region is number one in consumers planning to spend the same as last year. Combine that with having the fewest planning to spending less or more and it could signal close to zero growth. Consumers here also report having the lowest holiday gift budget, at $713.
 More late season shoppers are here than any other region, as one- third say they will do most of their shopping the two weeks prior to Christmas. Only 13 percent plan to do most of their gift buying the two weeks following Thanksgiving.
 Mail order and warehouse clubs are at their lowest levels of popularity here, being named as primary holiday shopping methods by 18 percent and 6 percent, respectively.
 These findings are from the 1993 Consumer Confidence Report, conducted by Arthur Andersen. The study randomly surveyed consumers in seven regions on their holiday shopping plans and their reactions to changes in the economy. Research was conducted by telephone from Oct. 27 through Nov. 4. National findings were calculated using weighted regional results, based on population. In total, 933 surveys were completed nationwide.
 Regional definitions used in the study were as follows. Northeast: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Washington, DC, and West Virginia. Southeast: Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. Midwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin. South Central: Arkansas, Louisiana, Oklahoma and Texas. Mountain: Arizona, Colorado, Idaho, Montana, New Mexico, Utah and Wyoming. West: California, Hawaii and Nevada. Pacific Northwest: Alaska, Oregon and Washington.
 The Consumer Confidence Report is one of several retail industry studies conducted by Arthur Andersen, a worldwide organization providing professional services in accounting, audit, tax, and management consulting services to clients through 320 offices in 70 countries.
 -0- 11/22/93
 /CONTACT: Lawson Cox of Arthur Andersen/Atlanta, 404-223-7160/


CO: Arthur Andersen & Co ST: Georgia IN: SU: ECO

BN-BR -- AT001 -- 6676 11/22/93 08:37 EST
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Date:Nov 22, 1993
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