Two new pricey videogame consoles from Sony and Microsoft are hitting retail shelves during the busy holiday shopping season — normally the perfect time of year, given that the games biz typically generates much of its sales during the period.
But there’s some reason for companies to worry. Polls show that spending is expected to be below last year’s amount.
Americans are expected to spend around $704 on Christmas gifts this season, according to a recent Gallup poll. That raises cautionary flags as retailers prep for Black Friday, considering shoppers in October had planned on spending on average $785 during the upcoming weeks. Last year, that figure was at $770.
This year, a late Thanksgiving coupled with consumer insecurity over the economy and subsequent lackluster holiday shopping forecasts are compelling retailers to step up their marketing campaigns to salvage the year’s biggest and most important shopping season: The holiday frame can account for up to 40% of a retailer’s annual revenue.
The National Retail Federation’s annual survey was equally dour, with average holiday spending on gifts, holiday decor, greeting cards and more put at around $737.95 , down 2% from last year. Overall, the NRF found that 79.5% plan to spend less overall.
“Though the foundation for solid holiday season growth exists, Americans are questioning the stability of our economy, our government and their own finances,” said NRF president and CEO Matthew Shay. “We expect consumers to set a modest budget for gifts and other holiday related purchases as they wait and see what will become of the U.S. economy in the coming months.”
Either way, the total average gift budget is nearly as much as the price for just one console from Sony or Microsoft. Sony’s PlayStation 4, which arrives in stores on Friday, is priced at $399, less than Microsoft’s Xbox One, out Nov. 22 for $499. Games and accessories like additional controllers cost extra — typically $60 for a single game.
In comparison, Walmart is selling the older PlayStation 3 with “Grand Theft Auto V” for $269.
To attract more consumers, marketing divisions are promoting the next-generation consoles as not just videogame players but as hubs for all forms of entertainment.
But the sales forecasts are down across the board.
■ An estimated 26% say they will spend $1,000 or more on gifts, down from 30% in November 2012.
■ Around 31% said they will spend less than $250, up from last year’s 27%.
■ Adults living in upper- and middle-income households making $75,000 or more will spend $87 less this season.
■ Those earning between $30,000 and $74,999 will spend $80 less on average.
■ But lower-income households believe they will spend $82 more, averaging around $467.
■ And 8% of those polled said they won’t plan to buy Christmas presents at all.
Still there are some good signs for retailers this holiday.
Spending is much higher among shoppers who will conduct their buying online.
That group plans to spend 20% more than others and $884.55 on average. More than 40% also said they started their shopping in October or earlier.
And stores are expected to see sales increases this year, although just how much is debatable. Gallup puts it at around 3.7% to 4%, the NRF at around 3.9% to $602.1 billion.