Holiday Shopping Savings

The falling stock market, the summer’s high gas prices, and high food prices have all taken money out of consumer’s wallets. Home mortgages can’t be refinanced to get out extra equity when home prices are falling, credit card limits are getting tightened, and more people are unemployed, so many people have less to spend.

Retailers count on good holiday sales to make a profit for the year. The National Retail Federation forecasts that there will be $470.4 billion in holiday sales in 2008, up 2.2% from last year but the worst year since 2002. Holiday sales increased about 3.5% in 2007, and that was a disappointing year for retailers. The NRF expects consumers to spend an average of $832 this year, up from last year’s $816. On the other hand, ABC News reports that 51% of people say they will spend less, $716 this year, down from $925 last year. Reports often say the Friday after Thanksgiving is called “Black Friday” because it is the day retailers hope to make a profit or go into the black for the year. This implies they are in the red for the first 10 months of the year, which is not always true. For example, Kohl’s reported a third quarter profit of 52 cents per share, down 17% from last year but still a profit. And Wal-Mart reported a third quarter profit of 80 cents per share, up from 10% last year. Amazon.com reported their third quarter profits were up 48%. But even Wal-Mart and Amazon.com adjusted their projections for the fourth quarter downward. So retail shops are starting sales before “Black Friday” and going back to offering layaway so people can shop now and pay for items a bit at a time.

In the last few years, online shopping has been growing faster than retail shopping. U.S. online sales for the fourth quarter of 2007 totaled $41.8 billion, and it is expected to grow to $44 billion this year. The Monday after Thanksgiving has been called “Cyber Monday”, holiday online shopping starts then and peaks between December 5 and December 15th. . During the holiday season, online shopping peaks on Mondays, as opposed to midweek during the rest of the year. This could be because people extend their weekend shopping online to search for better prices or items that were about of stock locally. PriceGrabber.com surveyed 2641 on-line shoppers between October 20 and November 10 2008. 71% said they would spend less this year, and 55% planned to do most of their shopping online. The TNS Retail Forward survey, which did not focus on online shoppers, found fewer shoppers said they would buy via “non-store channels”, which includes online shopping and catalogs. Some reasons people don’t like to shop online include cost of shipping, fear of fraud, and being unsure of the quality of the merchandise. Many websites are offering free shipping to get past the first problem. To avoid fraud, look for a lock icon in your status bar and beware of using public computers that may have keystroke loggers on them.

So what can you do to spend wisely this year?

Make a list of who you will buy gifts for and how much you intend to spend. Pay attention to what a person likes or needs. If you know someone who is going to get a dog, they may like cheaper items like dog toys that you wouldn’t normally get someone. Decide what you intend to get early so you can take advantage of the “Black Friday” sales. See if other friends or relatives would be willing to pool money with you when you know someone who really wants an expensive gift. If any of the expensive items on your list are being offered as early bird specials in a sale, plan your trip to get those first. Once you have got your big gifts, shop by gift idea instead of by person. Some stores will offer a discount if you buy several of the same item. For example Buy 4 DVDs, get the 5^th free or buy one, get the second half price. Shoppers are choosing to shop at discount stores such as Wal-Mart, and skipping more expensive stores. Another advantage of shopping at Wal-Mart or other “big box” stores is that they have most types of merchandise under one roof. Shop early, especially if you are shopping online or need to mail the gift. It is true there will be sales right before Christmas, but retail stores will be picked over and no longer getting new shipments. And you will have to send your gifts by express mail instead of parcel post after December 16. Online retailers who are currently offering free shipping to entice shoppers may stop offering it when the only way to get the package to you on time is express shipping.

There are several ways to take advantage of the convenience of online shopping. You can check the websites of traditional retailers to find out about their sales, buy items to pick up from the nearest store, or even sign up to be sent information. For example, Border’s has a reward program that sends a weekly email with a list of sale items. Shop.org has set up www.CyberMonday.com as a one-stop site to check for bargains offered by several companies. Pricegrabber.com is another site that is organized as if you were shopping in one store. Pay Pal gives Insider Deals, rebates and free shipping.

Here are some gift ideas for gifts under $50.

The O List: Gifts Under $50 from Oprah

50 Fabulous Gifts Under $50 from Real Simple

10 great holiday gift ideas for under $50 from MSNBC

Oprah also has a list of gifts under $100 and suggestions from her readers.

The O List (Holiday Edition): Great Gifts Under $100

How to Save on Holiday Gifts

If you still can’t decide what to get, consider a gift certificate. Gift certificates are becoming more popular, 53% of people would consider giving them, near the 57% of people that are considering giving the most popular gift (clothing). The major credit card companies offer gift cards that you can use in any store, or you can buy mall gift cards from a local mall, movie theater, or restaurant.

One pitfall to avoid is buying gift certificates from companies that are going bankrupt. For example Circuit City filed for Chapter 11 bankruptcy November 10th. This could be trouble for people who have gift cards or extended warranties there, if the only store near them is one of the stores that is closing or the company closes down completely after Christmas. But there will be sales, and you can find bargains on items you won’t need to return such as DVDs and video games. Another problem might be collecting on the mail in rebates that are a big part of electronics sales. CPG Marketing, one of the largest rebate handling companies, also declared bankruptcy. So look for deals that do not require a mail in rebate.