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No, don't expect to see windmills and solar panels -- consumers are leaning toward a different kind of green this holiday season: cash. Rather than hit their credit cards, shoppers will only be spending money they have (and can see and touch). Seventy-one percent of consumers are looking to cash and debit cards as their primary form of payment for holiday shopping this year, which the National Retail Foundation pegs as the highest level since 2005.
This could be a problem for the retailers.
Sure, you'd think that the merchant fees on credit cards make cash more attractive to the sellers. But, Ellen Davis, a spokesperson for the NRF, says that most retailers have found they can talk credit card buyers into up-sells more easily. That leads to a bigger basket size and more revenue. Done successfully, it should comfortably absorb the impact of merchant fees. James Roberts, a marketing professor at Baylor University, adds that using plastic makes consumers more likely to buy at all, let alone more.
When consumers have to part with cash, the feeling is both profound and immediate. According to Sue Fogel, marketing chair at DePaul University, spending with credit cards "doesn't seem quite as real." Economics professor Robert Frank, from Cornell University, says it "isn't quite as palpable and vivid," according to a report in USA Today.
A survey by the NRF shows that 28.3% of consumers plan to rely on credit cards during the run-up to Christmas, down from 31.5% in 2008. The decline has been going on for a while: in 2007, close to a third of consumers were eager to melt some plastic.
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