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Poll predicts consumer spending decline will be slight.

Staying out of a double squeeze play

Although some say the road to hell is paved with good intentions -- and it could be true for retailers this holiday season -- Chicago pollster Owen Shapiro sees a somewhat brighter fourth quarter for newspaper advertising sales.

Leo J. Shapiro and Associates, LLC, where Owen Shapiro is vice president, has been tracking consumers' spending intentions for the holiday season since 1975, asking participants in a national sample whether they expect to spend more, less, or the same.

In August-September of 1998, 33% of those polled said they expected to spend less that year; during the same period in 1999, that figure was down to 28%; and, this year, 33% again said they expect to spend less. Shapiro's conclusion: "There's some suggestion of softening on spending by consumers from last Christmas, which was really a barn- burner."

Another factor affecting fourth-quarter ad sales is the Internet, he says. Shapiro's firm sampled households nationwide with Internet access and found that last year 13% bought holiday gifts online. This year, he expects that figure to jump to 23% and the spending level to rise from $316 to $381 per household, for a total increase in online spending of about 110% from 1999 to 2000.

So traditional retailers will be "doubly squeezed," Shapiro says. Spending may be a little soft this Christmas season, and an increasing share may go to online retailers -- "both of which may drive discounting deeper and quicker than we have seen in some time. ... Brick-and-mortar retailers are going to feel compelled to increase print advertising to try to maintain sales [and reclaim them] from online."

In addition, Shapiro says, his research suggests that brick-and-mortar retailers are likely to increase spending late in the fourth quarter "to stoke demand, depending on what they've done with their inventories, especially coming off last Christmas -- and they may be encouraged late in the quarter to spend."

Kurt Barnard, president of "Barnard's Retail Trend Report" in Upper Montclair, N.J., is even more bullish. Referring to retail sales, Barnard says he's forecasting a "respectable" albeit "unspectacular" holiday season in which retailers will improve on the absolute sales numbers of 1999 but won't quite match the rate of growth.

In addition to the uncertain prices of gasoline and heating oil -- and the unpredictability of the stock market -- Barnard says, the average American owes nearly $8,000 in credit-card debt. That's something like $635 billion as a nation, which has led to an anomalous economic situation: "People have jobs; they earn money; but they don't have any spending money in their pockets." This situation, he believes, will cause consumers to look for the best possible prices.

"Americans want to buy and will buy good things," Barnard says, "but they won't buy frivolously or on impulse. ... A lot of retailers will go all-out trying to make themselves attractive to this newly cautious consumer."

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Comment:Poll predicts consumer spending decline will be slight.
Author:Liburt, Ellen
Publication:Editor & Publisher
Article Type:Brief Article
Geographic Code:1USA
Date:Oct 23, 2000
Words:481
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