With only 26 days between Thanksgiving and Christmas— six fewer than last year— the retail industry is already up in arms about turning a sufficient profit. But the shortened holiday shopping period isn’t the only factor manufacturers and retailers need to worry about. According to a special IRI survey, 43 percent of consumers plan to rein in their 2013 holiday spending, not because of lack of time, but because of concerns about the debt ceiling crisis and another possible government shutdown. Those who plan to cut back include 53 percent of lower-income households, 52 percent of Hispanics and 47 percent of all households.
Conducted between October 31 and November 5, 2013, IRI’s survey provided follow-up information as a supplement to the Q3 MarketPulse study, which was conducted in the days leading up to the 2013 government shutdown. The government may be back in working order,
but consumer confidence has not bounced back so quickly. In fact, many consumers are tightening their wallets this holiday season in order to build a safety net in case of another shutdown.
Along with a lack on confidence in their personal finances, consumers now display an overall lack of confidence in the U.S. government’s ability to pass a 2014 budget that will avoid the debt ceiling crisis. Only 15 percent of consumers are confident that the government will reach an agreement, while the majority (53 percent) is skeptical as to whether the government can avert another shutdown. Thirty-two percent remain uncertain. If the country does hit the new debt ceiling, and the government is forced to shut down in early 2014:
- 57 percent of consumers expect their financial strain to increase, versus 46 percent who anticipated increased strain before the October 2013 shutdown
- 45 percent of consumers say they will have less money to spend on groceries, versus 35 percent before the October 2013 shutdown
- 44 percent of all consumers say they will have to reduce/eliminate trips to some of their favorite stores, compared to only 31 percent before the October 2013 shutdown
Consumers are prepared to strap down their wallets at any sign of trouble, and the impending debt ceiling crisis and plausible government shutdown is no exception. CPG retailers and manufacturers must keep a close eye on the situation and be prepared to react rapidly to whatever happens next. As challenging as this time is, it is also a critical opportunity to protect and grow loyalty by ensuring that key consumers know that their preferred CPG companies have their backs and are making efforts to support them by providing strong value every day, particularly in the event of another yet another financial obstacle .