What will lower Valentine’s Day sales mean for retail?
Consumers in the U.S. are expected to spend less on Valentine’s Day this year, according to an annual survey released by the National Retail Federation (NRF) and Prosper Insights & Analytics.
The average consumer is expected to spend $136.57 this year, down from a record-high $146.84 in 2016. NRF sees the drop as part of a “market correction” after a decade of year-over-year increases for the holidays. In total, consumers in the U.S. are expected to spend $18.2 billion for the holiday versus $19.7 billion last year.
“Valentine’s Day continues to be a popular gift-giving occasion even if consumers are being more frugal this year,” said Matthew Shay, president and CEO of NRF, in a statement. “This is one day of the year when millions find a way to show their loved ones they care regardless of their budget. Consumers will find that retailers recognize that their customers are looking for the best deals and will offer good bargains just as they did during the holiday season.”
Candy (50 percent) and greeting cards (47 percent) will be the two most frequently given gifts for Valentine’s Day with an evening out (37 percent) and flowers (35 percent) also proving popular. Jewelry (19 percent), clothing 19 percent) and gift cards/certificates (16 percent) were also cited by the survey’s respondents.
As a reflection on an ongoing trend, 40 percent of consumers said they would like a gift of experience for the holiday, such as a ticket to an entertainment event, gym membership or outdoor activity. Even so, only 24 percent plan to give this type of gift to their Valentine.
As to where consumers plan to go shopping for Valentine’s Day gifts, the highest percentage said department stores (35 percent). Discount stores (32 percent), online (27 percent), specialty retail (18 percent), florists (18 percent) and local businesses (15 percent) were also named as shopping destinations.
NRF Valentine’s Day Spending Survey, conducted by Prosper Insights & Analytics, asked more than 7,500 consumers about their spending plans for the holiday. The survey has a margin of error of plus or minus 1.1 percentage points.
Discussion Questions
DISCUSSION QUESTIONS: What do you read into the projection of lower Valentine’s Day sales this year? Will expectations for a softer holiday lead to increased discounting?
Poll
BrainTrust
Ralph Jacobson
Global Retail & CPG Sales Strategist, IBM
Paula Rosenblum
Co-founder, RSR Research
Retailers that put the day into context for their patrons and then align with that will do well, not just in Valentine’s Day purchases but in increased loyalty. The key number in the research finding was the 40 percent of consumers who say they want the gift of experience. This yells out that whatever product is being sold needs to be put into a lifestyle and experience context. Sorry if that sounds like retail 101, but the lack of it that we are seeing is reflected in the failing and struggles of retail.
Projections are merely projections and intent is not behavior. Those retailers that directly compete for Valentine’s Day sales know they need to compete, so I’m not sure this year will be any different regardless of expectations. I find it ironic that department stores were most cited as the place to shop when virtually everything we read today says that department stores are on death’s doorstep. So much for surveys … polls didn’t pick Trump either.
The vast majority of procurement has already happened a long time ago for the merchandise intended for this “holiday,” so if this projection is to be taken seriously, the discounting will need to start immediately. Remember, your best discount is typically your first discount.
This is the retail-boosting fake holiday I hate. It is so fake and corny. Some retailers will benefit because they know their shoppers and what to promote. Others just run a basic promo to unload leftover inventory. It is a post-Christmas load promotional event.
Any retailer that depends on this holiday — besides the flower business — needs to consider getting out of retail. Even Hallmark is not dependent on this fake, retailer-created day. Save your money, cancel Valentine’s Day at your home.
The one sentence that screams loudly for every retailer is, “As a reflection on an ongoing trend, 40 percent of consumers said they would like a gift of experience for the holiday, such as a ticket to an entertainment event, gym membership or outdoor activity.” I imagine the reference is not just related to Valentine’s Day, but to all gift occasions. This trend was highlighted during the holiday season.
The only reason more discounting will be generated is if the retailers overstock against a declining demand. By putting more merchandise out on the shelf, they are not going to change the desires or new habits of the shoppers. They are only going to create further need to cut the price to clear the unwanted inventory.
Hang on a sec. It’s not like we are talking about the holiday season. Valentine’s Day has never been a major retail holiday. In fact, I was in the party supply business before becoming an analyst and it was one of the least “interesting” events from a sales perspective. Some candy, some cards and a lot of flowers got sold.
I’m sure it’s good for the jewelry business but, again, I can’t see it as a total barn burner.
Net-net, I think this is much ado about not too much.
Paula, I don’t think Valentine’s Day “parties” are supposed to include large crowds? 😉
When I first started in retail the owner of the company I was at told me something I never forgot regarding discounting. He said the first cut is the kindest. A very similar statement to what Ralph stated. I agree that if a retailer foresees soft sales for Valentine’s Day the time to discount is now. By moving early, they stand a better chance to capture the sale.
Every year, among every generational cohort, the marriage rate declines. (True globally as well.) Despite this, and the numerous books and blogs about the glories of being single, marketers still treat Valentine’s Day as an event for romantic couples. This is a swing and a miss for marketers — not an indicator that consumers won’t buy.
Ideas: Valentine’s for pets, for mom, for friends and, mostly importantly, for self.
First things first. Has anyone mentioned this to my wife?
I thought not.
What I have observed among my Millenials however is that their relationships don’t generally rely on the “gifting” thing as much as ours seemed to. The idea of shared experiences is becoming much more valued. While it’s not so good for traditional retail, I think it might be a very good thing for our kids.
Look to segmentation of the market for a tighter consumer spending outlook. Boomers are either slightly less romantic this year or they are watching budgets more closely, as they will drop the most. Millennials are going to spend more on an evening out, candy and flowers. Clothing will be softer among all age groups.
And Generation X is coming at the holiday in the spirit of the season. They will spend more overall and jewelry sales to this segment will jump 15 percent on average to about $215.
Know your customer. It positions you to know where and if the discounts need to occur.
I agree with Paula’s comments. Valentine’s Day for us is flowers and cards. No big gifts. Retailers might be busier, but this is not going to be a blockbuster sales time in terms of total numbers unless you are a Hallmark store.
I find the figures remarkable — even the lower one is about $125 more than I would have expected — but what do they mean? By themselves, probably not a whole lot (particularly if you aren’t a restaurant, jeweler or other retailer likely to be patronized). Come back to me in a year with a whole slew of like-to-like comparisons and perhaps we’ll see a trend.