Retailers nervous as consumers beef up credit scores

10.03.09
By Steve Monfort

Consumers may be gaining ground when it comes to lowering their credit score, but that has some retailers nervous as the holidays get underway.

For example, one early indication of shopper's holiday spending plans could come in the form of recent data from the National Retail Foundation which finds that people will be spending less this Halloween.

According to the trade group, shoppers are projected to spend an average of $56.31 on Halloween this year, down from $66.54 last year. Consumers are expected to spend a total of $4.75 billion in Halloween this year.

"Since retailers know that Americans will be looking to celebrate on a budget, there's no doubt we will see creative costume and decorating ideas in every price point imaginable," said Tracy Mullin of the National Retail Foundation, which also cited survey results showing that 29.6 percent of consumers say the economy will impact their Halloween spending plans this year.

Earlier this week, separate data from ICSC Research predicted a modest increase in spending for the Christmas season of about 1 percent. This would be an increase over last year's recession-driven showing, but would still mark the weakest retail holiday figures in some 40 years.

Finally, a Reuters report said that others, such as America's Research Group, predict that holiday sales could actually be up to 3.5 percent lower than last year.

The wire service also cited data from Javelin Research noting that as consumers pare back their credit card spending and overall debt, and as card companies reduce credit limits, the likely response will be a trend toward lower holiday spending.

Overall, consumers may be making progress on their long-suffering credit scores and debt balances, but this won't necessarily be good news for some retail companies in the short term.

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An improved personal finance outlook may not be good news for some retailers.