Mixed messages about the nation's economic health and tightened household budgets have kept consumers cautious for most of 2010. Consumers have pegged their confidence in the economy to the labor market, which has shown few signs of improvement. Measures of consumer confidence continue to hold to levels nearly half of what they were prior to the recession; overall consumer spending in 2010 has been conservative and savings rates have risen. Consumer apparel spending, however, looks more positive for this holiday season. Consumers have shown a return to purchasing apparel in 2010, with eight consecutive months of year-over-year increases in spending (BEA). These increases, along with back-to-school apparel sales that exceeded expectations, give some foundation for hopes of stronger holiday apparel sales than in recent years. After two years of holding back on clothing purchases, consumers seem ready to open their holiday wallets and even their credit cards to buy for others and for themselves.
For those that have been denying themselves apparel over the last couple years, apparel will most likely figure prominently in holiday purchases. Key insights include:
* Apparel gifts will be in high demand as shoppers try to fill the gap left by restrained apparel spending earlier in the year.
* Consumers are still looking for bargains, and this year's holiday shoppers plan to look beyond mass merchants to find them.
* Holiday shoppers are embracing their credit cards again. With greater access to and less limit on credit, consumers may be willing to spend more on gifts and on themselves.
According to the Lifestyle Monitor data, gift cards continue to be the favorite gift to purchase and receive, while clothing is number two on consumers' holiday shopping lists, up from number four in 2009. The following chart illustrates the top five planned gift purchases in 2010 as they compare to 2009.
Apparel Rises in Planned Gift Purchases 2009 Top 5 2010 Gift Cards 1 Gift Cards Toys 2 Apparel Electronics 3 Toys Apparel 4 Electronics Food or Beverages 5 Jewelry Full analysis can be found at the website CottonLifestyleMonitor.com.