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[19 comments]

Love, Frugal American Style

January 29, 2010

By George Anderson

In 2008, according to the National Retail Federation (NRF), consumers spent $17 billion on Valentine's Day. Last year, that number dropped to $14.7 billion.

At the time, Tracy Mullin, president of NRF, said, "A bad economy won't stop Cupid this Valentine's Day, but it might slow him down. This year more than ever, consumers will look for creative and inexpensive ways to show those they love how much they mean to them."

Now, one year later and coming up on another Valentine's Day, will consumers be more likely to spend on their dear hearts or will they forego fine dining at a French restaurant for a special reservation-only trip for two to White Castle.

The New York Times reports that marketers are working under the premise that consumers will be looking to show they care on the cheap, once again, and are running ads and promotions that emphasize affordability.

Back to the White Castle reference, the company's website invites consumers to call selected restaurants and reserve a candle lit table for two where they will be served by staff. Patrons can even upload their photos to the White Castle website for all to see. A meal for two that comes with 10 hamburgers, two orders of fries and two 21-ounce sodas will cost $10.49.

Other offers, cited by the Times, include Valentine's-themed candies at Target for $3.99; 15 percent off Martha Stewart brand flowers at 1-800-Flowers.com; and 20 percent off Figi's chocolates and cookies at Walgreens.com.

Discussion Questions: Do you think consumers will loosen their purse strings this Valentine's Day? What types of promotions do you think will work best this year and are there you've seen that stand out for being good or bad?

Discussion Questions:

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Do you expect consumers to spend more or less on Valentine's Day this year?

Comments:

When you look at holidays like Valentine's Day, you do have to check what day of the week they fall on.

Last year Valentine's Day fell on a Saturday, which is pretty darned optimal. But having it fall on a Sunday this year also bodes well for retail sales.

- people can shop on Saturday for gifts, and present them to their partners on Sunday morning
- whole families can go out for an "I love you" Valentines Day brunch, lunch or dinner.

Of course, it doesn't hurt that the press reports GDP rising and new unemployment claims falling.

I am a strong believer in the American passion for consumption. You can only keep it in check for so long (which is why I expected holiday sales to be up) and it has been in check for quite some time. Frugality fatigue has set in, and there's no better excuse for buying a gift than telling someone you love them.

With all that in mind, make no mistake--Valentine's Day is not a "killer" holiday, sales-wise. But for chocolate and flower sellers? Big spike.

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Paula Rosenblum, Managing Partner, RSR Research

Consumers will be as frugal as last year, or more. They will look for more practical gifts than the superficial splurge. This seems to be a sign of the times moving forward so merchandisers and marketers would be smart to sing to this tune!

Susan Rider, President, Rider and Associates, LLC

Consumer spending is opening up a little bit, but I would still look for "value-based" promotions to remain popular.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

Knowing that my wife also follows the RetailWire blogs, my answer is YES!

After a year of restraint and stress that consumers lived through, I think its a fair assumption that money will flow a little easier this year. Sales results lately have been quite good, and there's no reason to believe otherwise that Valentine's Day won't be a success.

Look for the most successful promotions to centre on emotional triggers, not just price discounts.

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Kevin Graff, President, Graff Retail

Consumers are not ready to loosen their purse strings. Wall Street may be paying obscene bonuses, but main street has yet to see much economic recovery. As a result, consumers will be looking for creative ways to express their love at value prices this Valentine's Day.

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Max Goldberg, President, Max Goldberg & Associates

Why does love have to cost so much? $10.49 for dinner at White Castle! I'm not made of money. Perhaps my wife would be okay with just a homemade card. Ooops. She just walked in. Now I'm in trouble.

Maybe retailers should focus on the emotional aspect of this holiday and leave the big spending to other holidays like Arbor Day or George Washington's Birthday.

Marc Gordon, President, Fourword Marketing

Retailers can expect to see modest gains for Valentine's Day, just as they did for holiday shopping. There's a sense among consumers that "the worst is over," despite high unemployment, especially compared to the mindset a year ago of being at the edge of a precipice. And jewelry turned out to be one of the strongest categories at retail during 4th quarter--jewelry is a traditional driver of Valentine's Day business, so this year's holiday results should be upbeat.

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Dick Seesel, Principal, Retailing In Focus LLC

There's no question that the economy is taking a toll on occasions like Valentine's Day but I can't help thinking that precipitous declines in the greeting card category and the proliferation of gift cards have to be contributing to the issue.

E-cards and other digital greetings have to be taking a chunk out of the traditional channels. Gift card revenue isn't recognized until the card is redeemed which could be weeks or months later.

Doug Stephens, President, Retail Prophet

I agree with Paula that the day of the week is important and will impact the total purchase. However, I also agree the consumers will remain frugal. The net may be the same or even higher sales level as last year, but with a continued emphasis on affordability.

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Steve Montgomery, President, b2b Solutions, LLC

Dinner for two at White Castle? I'm in! I think the American consumer is ready to cozy up to Valentine's Day a bit more than last year, but I think they will look for the best bargains on commodity items like candy and flowers and they will support restaurants and other entertainment venues who are creative and provide great value. Hmmmm...I wonder if I can get a really cheap fare for my husband and I to Chicago.

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Marge Laney, President, Alert Technologies, Inc.

Candy and flowers? How about some dark chocolate covered almonds ($4.29) and an intensely fragrant hyacinth ($5.99) from Trader Joe's? We non-Wall Streeters can have Valentine's Day romance AND keep our expenses down. Retailers know that this is the norm these days and they're ready to work with us!

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Cathy Hotka, Principal, Cathy Hotka & Associates

Last year a lot of couples found that cooking their private Valentine's dinner together and then enjoying it in their own dining room with candle light and wine was a winner--and mere steps away from the bedroom. I think many satisfied customers will do the same again this year.

'Liatt'

Depending on the reaction of LY's scale back I think it will be even or slightly down. Liatt got it right, people are re-discovering spending time together.

'OscarSmith'

I like the words "creative" and "inexpensive." More thought and less money sounds about right for this year.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Agree, Love, American Style 2010 will likely be more about the quality of time we can spend together and smaller things that matter more. Don't see a big turnaround in eating out, we are liking the family dinners and retailers have helped by providing more convenient meal solutions. Many ways to share fun and romance without spending the big bucks!

Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

First of all, if you have to spend a lot of money to prove you love someone, you've got problems beyond economic conditions! Secondly, spending less is "the new normal," right? Let's just get used to that--we're not as drunk on fake money as we used to be and re-thinking our wayward retail habits of the past is the new us.

So, strong brands will figure out how to suggest to their best customers ways to NOT spend money to express their love. That type of brand-based behavior will create loyalty, which right now, is more important than likes to likes sales.

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Lee Peterson, EVP Creative Services, WD Partners

Based on the Omnibus data we have been seeing, I would anticipate Valentine's Day consumer spending to be up over last year. Valentine's Day should see a larger improvement than was evident during the 2009 holidays. We also are seeing greater increases in Fine Dining than most categories. Jewelry is the only category we don't see at least weak improvement. And, as always, men anticipate spending more than women do.

Tom McGoldrick, Director of Research and Consulting, Questar

Whatever the gifting occasion, consumers over the past two years have indicated a desire to cut their gifting dollars and find ways to be more practical about gifting. This year's data from NRF, as well as the examples highlighted in the NYT story are no surprise.

Because consumers are participating in practical gifting, brands need remember that fewer gifts and fewer gifting dollars need to pull more weight. For example, "double-duty gifts" allow a single gift to do more, like buying a gift that's functional and stylish, or buying a gift for a loved one from a website that gives a certain percentage of sales to charity. Another tactic may be to offer gifts that are highly personalized, i.e., rather than buying 3 gifts for a loved one, consumers will be shopping for a single gift that carries higher emotional value for the recipient. For example, a recent Hallmark Valentine's Day pamphlet highlighted all the brand's products that consumers can personalize with recorded messages, pictures, songs, etc.

Across the board, brands need to rethink how they market to consumers in the new economy. Consumers have adopted a new spending mindset and new shopping behaviors. If they haven't done so already, retailers need to adjust to the new reality.

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Tim Henderson, Editor/Writer, Independent

Lee and Tim have realized that there is a "new mindset out there", and anyone who hasn't gotten that yet is likely to miss the boat, sales and market share wise. An entire generation of "Great Depression" survivors learned frugality and became the bankroll of the economy with their hard work, savings and investments. The free spenders of the recent past have learned a terrible lesson. Lost homes, failing banks, inevitably rising taxes is a message that won't go away without years of comfort and ease that are not likely to return. Wall Street has killed the Golden Goose and she won't be laying any golden eggs. Time to rethink how you serve the economy/country/people. The "consumer" is dead, or at least, will be on a LONG sabbatical.

'FreezerFreak'

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