By  on October 14, 2008

Forget shopping as therapy.

Consumers will be on an anti-consumption crusade this year, limiting holiday 2008 sales gains to a nominal 0.5 percent to 1 percent, below the core inflation rate of 2.6 percent, according to Archstone Consulting.

“Our research and modeling shows that retailers and manufacturers are bracing for the toughest holiday sales period since 2001,” said Todd Lavieri, president and chief executive officer of Archstone, adding his firm’s retail and manufacturing clients “are seeing almost an aversion to consumption. Even incremental drivers of holiday spending like the wave of foreign buyers that we have seen over the past four years driven by a weak U.S. dollar won’t be there this year.”

Adjusting for inflation, spending would be down 2.1 percent overall and off 2.9 percent on a per-capita basis.

Consumers will benefit from the soft environment as retailers resort to heavy markdowns to generate cash. Among the factors driving down consumption will be rising unemployment and job uncertainty, falling asset and savings values and, as Archstone reported previously, a reduction in gift card purchases.

The management consulting firm said consumers are undergoing a sentiment shift from “What do I want?” to “What do I really need?”

“Retailers will get hit by lower consumer spending and higher borrowing costs to finance inventory,” said Dave Sievers, leader of Archstone’s Consumer Products and Retail practice. “The pressure for early and aggressive discounting will drive down profitability and cash flow pushing some retailers on the edge closer to bankruptcy.”

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