With the back-to-school season winding down, it’s about that time of year for shoppers to look forward to the winter holidays. And while it may seem premature to preempt Halloween with the holiday discussion, last year one in five began their shopping prior to October, so many consumers are already planning their budgets for this all-important spending season. In July, we asked consumers to share their preliminary thoughts on holiday spending, and it appears that retailers may be in for a brighter holiday season compared to 2013.
According to the Prosper Spending Score, the overall outlook* for holiday gift spending in 2014 is up more than 8% from last year. While celebrants planning to spend more on gifts are relatively stable year-over-year at 9.1%, those budgeting less for gifts dropped 11% from 2013 to 38.0%. The majority of consumers (52.9%) are planning to keep budgets in line with the previous year. Directionally speaking, our preliminary Spending Score has served as a relatively accurate bellwether for consumers’ holiday intentions; last year’s lackluster score in July foreshadowed a nearly 3% drop in planned gift spending (released by the National Retail Federation the following October). Similarly, bullish preliminary outlooks for holiday spending preceded spending increases in 2010 and 2012.
On the outset, it appears that this year’s more positive outlook is driven by upper income households. Those earning $75,000+ per year maintain a Spending Score for holiday that is 13.2% higher than the overall average, while middle ($35,000-$74,999) and lower (below $35,000) income households fall 4.4% and 15.3 below the baseline, respectively. What’s interesting, though, is that middle income households recorded the most positive outlook compared to 2013 (up 7.3%), while upper (+5.3%) and lower (+5.7%) income earners maintain slightly less aggressive outlooks year-over-year, echoing a similar trend we saw in our latest Consumer Spending Forecast.
But how does the holiday outlook pan out for individual retailers? We examined shoppers for a select group of retailers from the 150+ merchants Prosper tracks each month, indexing them to the overall average Score for adults 18+ (baseline index = 100.0) to identify potential winners and losers for holiday 2014. Among this grouping of 15 retailers, shoppers from Gap (index to average = 121.8), Amazon.com (115.5), Costco (115.0), and Macy’s (110.8) proved to be the most bullish in their holiday gift spending outlooks this year, with Spending Scores tracking more than 10% above the overall average. Not only did these shoppers maintain some of the biggest holiday gift budgets last year, but they also exhibit the trifecta of positive indicators for spending (versus average): high household incomes, security in personal savings, and strong confidence in the economy. Sam’s Club (107.7) and Nordstrom (107.0) shoppers also logged above average expectations for holiday gifting this year, while Target (102.2), Sears (101.3), Best Buy (100.5), and TJ Maxx (99.8) loyalists were more in line with the general public.
The JC Penney (96.2) and Kohl’s (92.5) shopper groups both maintain slightly lower outlooks for holiday gift spending versus overall. While these two segments track slightly above average in terms of income and savings security, they lack confidence in the economy, typical for the heartland states in which these shoppers are concentrated. The holiday spending outlook for Walmart shoppers (94.4) is also tracking below average, as are results for Kmart (84.4) and Dollar General (60.8) customers. Not surprisingly, the commonalities between these three segments are sub-par levels of income, savings security, and economic confidence.
Much remains to be seen between now and November/December, and while consumer spending may perk up this year, many uncertainties remain regarding the economy, employment, and personal finances aren’t likely to lead to blockbuster levels of spending from consumers this holiday season, once again leading to a very competitive environment for retailers. Retailers boasting shoppers with brighter outlooks certainly have jumped the first hurdle, but will need to effectively reach, communicate, and resonate with these shoppers in order to win the race this holiday season.
* Holiday outlook insights are based on celebrants (adults 18+) who have holiday spending plans in mind.
This post originally appeared on Forbes.com.