According to renowned economist Diane Swonk., the forthcoming holiday season could be witness to a permanent shift in the spending habits among consumers even though that change or shift would be achieved at the cost of the department stores losing out.
“They can’t seem to lure into the department stores those millennials,” she said recently on a television interview. “The move from bricks to clicks, and the hybrid of the two is going to be a real problem.”
This season, there are expectations by the markets that there would be wholehearted spending by customers due to multiple factors that include the strengthening of the economies and the strong stock markets that have virtually broken a number of records, according to Swonk, who also is expecting a permanent secular shift. Swonk is the owner and operator of DS Economics.
About 39 percent of consumers who are aged between 25 and 34 years have made pans for spending more this season compared to what they did last season and about a quarter of the consumers who are aged between 18 to 24 years are also planning to add more to their shopping list form last year, according to a recent National Retail Federation survey, in the U.S.
Apparel, electronics, books, music and video games are the primary consumer segments that the young adults plan to spend the majority of their money on, finds the NRF study. And online shopping is their preferred choice of shopping.
“The department stores are really being left behind,” said Swonk. “Overall, spending will do great this holiday season, but will it be enough to sort of stave off some bankruptcies going forward? I don’t think so.”
While there are some areas that are likely to see a surprise boost, much more challenges are expected to be faced by the department though.
“Not only are we spending on homes again because they’re worth investing in again … people are finally catching up on all that pent-up demand and repairs and remodeling,” she said.
Vehicle sales and some of the clothing categories are also among the segments that would benefit, according to Swonk.
Consumers are also expected to show a shift from purchasing things than to experiencing things – especially experiences such as going out to dinners, bars and traveling, she also notes.
Weekday rates at hotels in crowded cities is typically high due to an influx of business travelers and now weekend rates at such places is exceeding the weekday rates, she observers.
“We’re now seeing that much travel. That’s even with Airbnb,” Swonk added.
(Adapted from CNBC)