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The Nielsen Company has come out with a new study saying that the upcoming holiday season is not expected to be the most wonderful time of the year – especially if you are a retailer. The study says that “more than one-third (35 percent) of U.S. consumers across all income levels expecting to spend less” during the holidays.

Getting more specific, the report says that “fourteen percent of consumers expect to spend less for the holidays in grocery stores, while 19 percent expect to spend less in mass merchandisers. Seventeen percent expect to spend less in drug stores and 12 percent expect to spend less in pet stores.”

In addition, Nielsen “forecasts flat to declining sales across grocery stores, drug stores, mass merchandisers and convenience stores for the holiday season and a 4.7 percent growth in dollar sales, in large part due to higher commodity prices. Nielsen projects unit sales to be flat or down 0.8 percent … Necessities, not the nice-to-haves, will drive strong sales this holiday season.”

“Clearly, consumers across all income levels have some trepidation about holiday spending,” says Todd Hale, Nielsen’s senior vice president, Consumer & Shopper Insights. “The unstable economic environment is creating a high level of caution among consumers, leading us to conclude that this will be a tough holiday season.”

KC's View:

Methinks that Todd Hale has a talent for understatement. The headlines and news coverage suggest that we’re in the middle of a full-blown panic, and that nobody knows where the bottom is.

A guy I know referred to our current situation as a “Craig’s List” economy – second hand, used products are beginning to look very, very attractive to an expanding segment of the population.

That said, Hale is right when he also says that “retailers answering consumers’ call for value will capture shoppers’ attention this holiday season. Whether it’s lower prices, instant rebates or free shipping offers, value messages will speak to bargain-seeking consumers in today’s tough economic climate.”

At the same time, though, retailer should not forget to continue to communicate their core values, not just their value proposition, to shoppers. Because eventually there will be an end to this mess that hopefully won’t involve the apocalypse, and retailers that have been consistent to their own values, and have built market share during the tough times, will be well-positioned for the good times to come.