Consumer confidence creates uncertainty for holiday shopping

Everything is ready at the Capitol Kids Toy Store for the doors to open for Black Friday shopping. They are well-stocked on quality toys that meet a wide range of price points.

Like other retail merchants, what remains to be seen is how shoppers will spend during the holiday season.

“I’m always optimistic about the holiday shopping season,” says Peg Schultes, owner of Capitol Kids.

Positive economic growth in areas like new home construction, increases in home sale prices and strong auto sales give reason for optimism. But mixed with that is a cause for concern.

Right now for instance, consumer confidence is at a very low level. It fell quite a bit in October during the government shutdown and continued to fall a little bit in November,” said Justin Sydnor, an economics professor at the University Of Wisconsin School Of Business.

Sydnor said the holiday sales are critical for many retailers if they are to turn a profit for the year.

“It is make-or-break for many companies. The holiday season is by far where the profits come from,” says Sydnor.

He says that while all indicators point to the economy improving, consumers are skeptical.

“If you look at surveys, for instance, the vast majority of people tell you not that they think things are improving or that they’re going to get worse, but they think that things are going to be exactly where they are now,” Sydnor said. “And if you accept that as the reality, I think it naturally does affect the things you are willing to buy. You recognize that if things aren’t going to be better next year, you then to be very careful with how you spend your money this year.”

Schultes said she sees that change in shoppers.

“I think people learned a lesson from the problems with the economy and I think that meant fewer people go overboard,” Schultes said.

To adapt to the change by consumers Schultes said they now carry quality toys that cover a wide range of price points.

“We try to make sure that we have a wide range of prices available for people to buy really nice things but at a variety of prices,” Schultes said.