88% of Consumers Plan to Maintain or Cut Their Holiday Spend, According to New AlixPartners Survey

Results Suggest "Generation Reset" and Changes in Retail Spending Patterns

Market Wire

posted: 78 DAYS 19 HOURS AGO

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NEW YORK, NY -- (Marketwire) -- 11/23/09 -- While many economists have called the end of one of the longest and deepest recession the U.S. has experienced since the Great Depression, consumers are saying that they are not ready to spend without reservation this holiday season, according to a survey released today by global business advisory firm AlixPartners LLP. The survey of 3,500 consumers asked about their spending patterns over the past year and their plans for this upcoming holiday season. It found that 88% plan to maintain or spend less than they did during last year's anemic holiday season.

"A year after the crash, Americans continue to worry about the economy," said Matthew Katz, a managing director and head of the retail practice at AlixPartners. "We see indications of an across-the-board realignment of spending patterns, the birth of what we might call 'Generation R' -- 'R' for 'reset.'" He added, "As we come out of this, we're also seeing many mixed signals. We definitely have pockets of improvement, and pent up demand is evident for some retail categories. Yet, the bottom is still murky, unemployment is above 10% and consumer confidence has quite a way to go."

The study suggests, Katz added, that the combination of fears about the economy and the proportional rise in other personal expenditures has led consumers to cut discretionary spending in three different ways: fewer purchases overall, a strong move to value-oriented retail formats and exercising more patience.

These new habits appear to be a reset, not a fad. Looking toward the future, 82% of consumers said they will continue to shop at the value oriented stores they have switched to. In terms of holiday gifts specifically, among those planning to reduce holiday spending, 60% said that they would spend less on each person and 55% said they would wait for sales and specials.

"We believe that consumers who are waiting for deep discounts like those of last year are likely to be disappointed," warned Bryan Eshelman, a managing director in AlixPartners' retail practice. "Those who wait will find fewer choices. The retailers we've been speaking to are totally focused on streamlining inventory, so that they don't have to engage in the kind of markdowns we saw in late 2008. And while promotion is still a big part of any retailer's business, the focus this year will be more on planned markdowns, not liquidation."

While signs for this holiday season are certainly more encouraging, the consumers in the survey said they plan to spend a lot less this year. How does all this translate into fourth-quarter and holiday results for retailers? Katz concludes, "It likely won't be as bad as the self-reported totals that consumers indicate, but we still expect sales to come in below what we'd desire."

The AlixPartners 2009 Retail Holiday Outlook survey was conducted November 2-8.

About AlixPartners

AlixPartners LLP is a global business advisory firm offering comprehensive services to improve corporate performance, execute corporate turnarounds, and provide litigation consulting and forensic accounting services. The firm's specialty is urgent, high-impact situations when results really matter. The firm has more than 900 professionals in 14 offices across North America, Europe and Asia, and is on the Web at www.alixpartners.com.

Media Contacts:

Meir Kahtan
(Meir Kahtan Public Relations)
+1.212.575.8188

Email Contact

Tim Yost
(AlixPartners)
+1.248.204.8689

MARKET WIRE

2009-11-23 10:17:30