NEW YORK (Oct. 29, 2008) – Post-Wall Street meltdown and heading into the winter holiday-shopping season, a wide majority (64%) of U.S. consumers are planning to spend less on gifts this year, tightening their belts in the face of an economic slowdown that almost half (46%) don’t foresee ending for at least three years. That’s according to a new survey released today by AlixPartners LLP, the global business advisory firm.

The AlixPartners Holiday 2008 Consumer Sentiment Index^SM, conducted by the firm’s recently expanded Retail Performance Improvement Practice, also found that 87% of consumers believe the U.S. is presently in either a recession or a depression (20% said depression) and that 74% of those surveyed said they lack confidence in government’s ability to take effective action regarding the economy—while 28% said “neither one is up to the task” when asked whether John McCain or Barack Obama would be most effective in handling the economy.

“Consumers right now are beyond nervous and concerned about the future,” said Fred Crawford, CEO of AlixPartners. “They’re taking personal action—cutting back on spending and activities, and they’re pessimistic about government’s ability—no matter who is elected next week—to fix the country’s economic problems quickly. Taken all together, that’s a recipe for consumer paralysis. Plus, with consumer spending accounting for more than two-thirds of GDP in this country, this could have huge ramifications for industries and companies well beyond retail.”

The nationwide survey of 1,000 consumers, 89% of whom were registered voters, also found that 86% expect to spend less than $1,000 on gifts this season (vs. 77% who said they spent less than that last holiday season), with 37% expecting to spend less than $250 (vs. 21% a year ago).

Asked how they plan to cut back, a question that allowed for multiple answers, 66% said they plan to “spend less on each person,” 60% said they plan to “wait for sales and specials,” 52% said they will be buying less-expensive merchandise and, of great importance to retailers, 33% said they “plan to shop at lower-price stores.”

Of that 33%, almost two-thirds (63%) said they plan to shop this season at mass-discount stores, with Wal-Mart and Target being named most often among multiple-choice options, while 15% said they would be shopping at dollar stores. And, among the fill-in-the-blank answers, several consumers listed Salvation Army and other second-hand stores as places they’d be visiting this holiday season.

Also of note in the survey: 37% of those polled blamed “consumers spending beyond their means” as the cause of the current economic situation, the third-highest choice out of a selection of 13 different possible answers (highest was “the Bush Administration,” at 51%, second was “mortgage lenders,” at 49%). The survey also found that 69% of all women plan to spend less this holiday season (vs. 58% of men), and all regions of the country share this sentiment at virtually the same level.

“While in the first half of this decade, many retailers enjoyed the ‘trading-up’ phenomenon, we have turned a corner and the watchword this holiday season is going to be ‘trade-down,’” said Matthew Katz, head of AlixPartners’ Retail Performance Improvement Practice and a managing director with the firm. “Consumers are going to be trading-down in terms of which products they buy, in terms of how many products they buy, in terms of the brands they buy and in terms of the types of stores they shop in. Everything is under attack as consumers actively and purposefully trade down in retail channels, out of necessity in some cases and out of fear in others. Department stores and specialty retailers, we believe, will be particularly hard hit; but no retailer is immune from this tidal wave that looks to be coming as an aftershock to the Wall Street crisis.

“All retailers,” Katz continued, “as well as all consumer-goods manufacturers and service providers to these channels, would be well-served to take even more preemptive action than most already are, versus being forced to take much greater remedial action after the holidays. In fact, for many, this may be a question of survival. First and foremost, expense must be eked out of operations, cash must be extracted from working capital and value must be squeezed out of everything. Management must look under every rock they can find, and some should seek help in identifying rocks they may not even know exist. Only by having a suitable cash cushion beneath them will companies be able to ride out this storm without going under.”

About AlixPartners’ Retail Performance Improvement Practice
AlixPartners has provided services to many of the biggest-name retail and consumer-goods companies in the Fortune 500, in such areas as business planning and reorganization, supply-chain management, store and field operations, inventory control, pricing and other “hands-on” capabilities. The practice is presently working with several large and mid-cap luxury retailers, multi-branded apparel manufacturers, specialty-store home retailers, consumer-brand companies and direct-to-consumer companies, among others. The group’s capabilities were recently expanded with the addition of two new managing directors, David Bassuk and Bryan Eshelman. Both joined AlixPartners from Kurt Salmon Associates Inc., a well-known retail consulting firm, where they helped retailers and consumer-goods manufacturers improve product development and sourcing performance.

About AlixPartners
AlixPartners is a global business advisory firm offering comprehensive services to improve corporate performance, execute corporate turnarounds, and provide litigation consulting and forensic accounting services. The firm’s specialty is urgent, high-impact situations when results really matter. It was the recipient of a record four awards from the Turnaround Management Association in 2008. The firm has more than 800 professionals in 13 offices across North America, Europe and Asia, and is on the Web at www.alixpartners.com.