As Black Friday nears, retailers expect the start of a busy holiday shopping season. But that spending spree will have to come from local consumers with smaller than average budget.
Sacramento residents are expected to spend about $541 per person this season, according to a survey by financial analysis website WalletHub. That figure is slightly over half the U.S. average of $967, but in the bottom one-third (No. 389) of the 570 cities included in WalletHub’s annual study.
Consumers in other cities in the Sacramento region are expected to open their pocketbooks a little bit more. The totals range from $506 in Yuba City (No. 431) to $1,223 in Elk Grove (No. 60).
In between, there is Folsom ($1,090, No. 84), Roseville ($900, No. 127), Davis ($605, No. 317), Citrus Heights ($592, No. 333) and Carmichael ($583, No. 350).
Shoppers in Naperville, Ill., are projected as the most generous in the U.S., spending $2,381 per person, followed by Sugarland, Texas ($2,368), Bellevue, Wash. ($2,367), Sunnyvale, Calif. ($2,360), and Carmel, Ind. ($2,330).
The overall figures represent an average spending increase of about 3.4 percent since 2016, according to WalletHub analyst Sridhar Balasubramanian. “The average consumer at this stage is positive about the economy and where it is headed,” he says. “The value of housing is up, and consumers are generally feeling good about their financial status.”
Retailers are taking steps to ensure that good feeling goes a long way. A different WalletHub study shows that stores are holding pre-Black Friday sales earlier than ever, with stores such as Target and Kohl’s offering holiday discounts right after Halloween.
On average, stores are cutting prices by 37.1 percent for the holiday season, WalletHub notes. Website analysts surveyed nearly 10,000 deals from 35 of the biggest U.S. retailers’ 2017 Black Friday ad scans.
Kohl’s and JC Penney, with a combined seven stores in the Sacramento region, topped the list with a projected 66.3 percent average discount. Sears and Macy’s, two other major Sacramento-area retailers, also finished in the top 10 (50.1 percent, No. 7, and 45.6 percent, No. 8, respectively).
“We are stepping up our game when it comes to showcasing the breadth of newness, excitement and value within our gift assortment this year,” says Marci Grebstein, JC Penney’s chief marketing officer. “By leveraging this key shopping period, we are looking to surprise holiday shoppers with the level of relevant merchandise available, updating their perception of our brand.”
There is a downside, however. Americans are projected to end 2017 with an additional $60 billion in credit card debt, according to Balasubramanian. “This year’s average holiday spending actually represents an increase of more than 20 percent over the past two years,” he says. “That figure puts us perilously close to the $1 trillion grand total recorded at the height of the Great Recession.”
The analyst recommends that consumers carefully follow a budget as they shop, make sure that family members know how much money is available for gifts, and even going as far as buying each person a gift card to use instead of a standard credit card.
In developing its budget survey, WalletHub analysts used five key buyer-related metrics: income, age, debt-to-income ratio, monthly income-to-monthly expenses ratio, and savings-to-monthly expenses ratio.