Average spending per family decreased

It’s Party, festival and holiday season across the country, but this is only for the people not for the retailers and sellers. During the festive season huge crowds rushed for their last minute purchases to the malls and stores offering discounts as high as up to 70% of the retail price; however there was no noticeable increase in the total dollar spending compared to the same period in the last year. An interview conducted with few individuals reveals that there’s a spending cut among people for the festival. Reasons cited were

  1. People are aware of the estimated spend cuts and tax rates next year so want to be cautious now
  2. Increased saving pattern among people.
  3. There is a possibility of a decrease in prices post-Christmas week
  4. The sales in the Mid Atlantic and Northeast were hit by Sandy Strom which hit the coast late October. The sales in these regions were accounted for 24%.

Retailers are pushed to the corner and are forced to slash prices post-Christmas week as they cannot be holding their products on store shelves for long and this festival time is the only chance for them to sell products.

To build morale and enthusiasm among people and encourage spending the retailers expanded the store time and increased discounts. Still analysts contend that the sale rates are better than the Thanksgiving Day.

It can only be said that the time has come where people have started channelizing their spending in a right way without giving in to the false discounts that the shops provide and many have now decided to wait for the right time to buy. If this condition continues in the future years the retailers will be compelled to reduce their margins and adopt a policy of fair trade to their customers. The percentage increase in online sales also showed merely a reasonable growth; it rose just 8.4% compared to the increase of 15%-17% in the previous three years.

The average spending per family in 2012 is $749.51 compared to $756 in 2007 while it was at all time low at $681.83 in year 2009.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.