How will the economy affect holiday spending?

How much money will you spend this year on holiday shopping? If you’re like many people, you’re feeling cautious about the economy, and that will affect your holiday spending.

As the nation faces its second holiday season since the economic recession hit last year, the National Retail Federation projects sales will fall 1 percent over the holidays. That may not sound like much, said Eugene Fram, professor emeritus at Rochester Institute of Technology’s E. Philip Saunders College of Business. But when you consider holiday sales dropped 3 percent in 2008, when traditionally sales grow year-to-year during the holidays, it’s significant.

But Fram said he thinks things will go better this year than many project. People have been in a spending drought now for months, he said, and that will likely spur growth for retailers, albeit for more basic, no-frills items.

“There are things people can’t live without,” Fram said.

It may be as simple as restocking a supply of coffee the family had been in the habit of buying prior to the recession. This new purchase might be scaled back, he said, but it will make the holiday grocery list, nonetheless.

Down on Main Street

Shelly Henehan of Hall, N.Y., has a household of five to feed and plans to spend Thanksgiving at home. She hopes that will help save money, though a certain amount of spending is inevitable.

“We are spending less this year because we have little kids and are staying at home for Thanksgiving,” said Henehan, as she picked out a turkey from Wegmans supermarket on Saturday. “We got a fresh turkey last year, and it was a lot bigger because we had more people. I think I only spent $40 this year for dinner; last year everyone chipped in.”

Another mom, Kris Feliciano of Manchester, N.Y., has six in her household. She will be entertaining a crowd for Thanksgiving and figures it will actually cost her more than usual despite everyone chipping in to contribute to the meal.

“I am spending more this year because I am having company,” she said as she shopped with her children. “I will be having 25 people over, so I will probably spend $400 to $500 this year.

“Everyone brings something, but when you are hosting, you are going to be spending more.”

Shop locally

Alison Grems, president of the Canandaigua (N.Y.) Area Chamber of Commerce, said merchants downtown are getting into the Christmas spirit early, having put up their lights and decorations about two weeks earlier than last year.

Local business owners are feeling the pressure, she said, with national retail chains doing aggressive ad campaigns and offering special deals much earlier than usual to encourage holiday shopping.

“Last year, there was a hesitancy to do things early,” she said, “not knowing how it would go with the economy so bad.”

Targeting their audience

To cash in on as much holiday shopping as possible, retailers are pulling out all the stops.

Shannon Ligammari, store manager at Target in Victor, N.Y., said the retail chain got feedback last year from customers that they wanted more fanfare.

Customers “made it loud and clear we weren’t festive enough last year,” as the store had cut back on some of the frills due to the recession, Ligammari said.

“This year we are dripping with festivities,” she said. “The stores are just jamming and gorgeous.”

Though she wouldn’t reveal figures, Ligammari said Target is expecting healthy holiday sales and is taking steps to promote that.

For example, the Target this year will extend store hours between Thanksgiving and Christmas and match competitor prices on many sale items. The store has also done more seasonal hiring.

Basic is back

Jo Natale, media director for Wegmans, said the supermarket chain has noticed certain buying trends that have emerged since the recession hit last fall.

“People have returned to the kitchen,” she said. During the 2008 holiday season, Wegmans’ sales of baking ingredients rose, she said, while sales of prepared baked goods did not increase like it has typically done during previous holidays.

As for purchase of prepared foods in general, buying since last year has trended toward basic foods such as pizza and rotisserie chicken, said Natale, as opposed to more elaborate and gourmet prepared choices.

Basic is definitely back, said Professor Emeritus Fram. No wonder, he said, as “people have been worried about finances for 13 consecutive months.”

Julie Sherwood writes for the Daily Messenger in Canandaigua, N.Y. Messenger Post reporter Kelli O’Brien contributed to this report.