Two pieces of economic data from today are prompting iProceed to ask businesses to push caution aside and prepare for a good holiday season.
- The payroll data is very encouraging as we enter a month in which consumers start to contemplate holiday shopping.
- The consumer credit data, while it shows that consumers are borrowing more (to spend it), can be interpreted in two ways. One, consumers may be feeling more confident about the future and might expect a gain in their income. On the other hand, lower savings rate, falling wages, and unemployment/under-employment are still real issues and it would not be surprising if the credit is a desperate measure to keep up with the rising cost of healthcare, gasoline, and state/local taxes. Consumer credit, in our opinion, is rising at alarming levels, and may be a cause for concern.
Here is what businesses need to do for exploiting the opportunity during the holiday season?
- Segment the market based on income levels. Several indicators (particularly from the election results) show that those consumers who have been able to keep their job feel very confident about their future while those that lost their jobs or know someone who has, are much more conservative. Both segments will spend during the holidays but what they spend on and how much they spend will be very different.
- Some additional research completed by iProceed shows that consumers are more interested in spending more on products that long-term create value (e.g. faster PC, better TV, etc.) than on another box of chocolate or bottle of wine.