Since emerging from the recession, American consumers have been willing to spend plenty of dollars on romance. This year, maybe not so much.
It appears that a fair number of Sacramento-area residents are cutting back on Valentine’s Day spending.
“I love my hubby, but I’m trying to hold on to my dollars a little tighter this year,” said Carmichael resident Tonya Bailey, looking at Valentine’s Day cards at a Hallmark store in the Sunrise Mall in Citrus Heights. “… It feels like Christmas was just last week, and we’re still paying those bills.”
Caution is in play from coast to coast.
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The National Retail Federation and Prosper Insights & Analytics recently projected a “market correction” in Valentine’s Day spending this year. The Washington, D.C.-based NRF predicted that U.S. consumers will spend an average of $136.57, down slightly from last year’s record high of $146.84. Total spending is expected to reach $18.2 billion, down 7.6 percent from $19.7 billion – also a record – last year.
The NRF/Prosper survey also noted that the number of people who plan to celebrate Valentine’s Day this year is 54 percent, down from 63 percent in 2007, when the nation was slipping into a financial crisis.
54 percentProportion of people who plan to celebrate Valentine’s Day this year, according to a National Retail Federation and Prosper Insights & Analytics survey
“Valentine’s Day continues to be a popular gift-giving occasion, even if consumers are being more frugal this year,” NRF President and CEO Matthew Shay said. “This is one day of the year when millions find a way to show their loved ones they care, regardless of their budget.”
Even so, this year’s projections are a break from the historical trend.
The last significant downturn in Valentine’s Day spending came in 2010, when the economy was slowly working its way out of a hard recession. That year, $14.1 billion was spent in the run-up to Feb. 14.
Over the next six years, save for a slight dip in 2014, Valentine’s Day spending was decidedly robust, culminating in last year’s record splurge. What’s unusual this time around is that Valentine’s Day spending is expected to decline following relatively strong consumer buying during the recent holiday season.
The NRF said 2016 holiday season retail sales increased 4 percent over 2015 to $658.3 billion. That exceeded the NRF’s pre-holiday projection of a 3.6 percent year-over-year gain.
Shay said he believes the 2016 holiday numbers were a reflection of “the nation’s slow-but-steady economic recovery … picking up speed and that consumers feel good about the future. Retail mirrors the economy. And while there might have been some bumps in the road for individual companies, the retail industry overall had a solid holiday season and retailers will work to sustain this in the year ahead.”
So, why isn’t that momentum carrying over to what is supposed to be the most romantic day on the calendar?
Peter Schaub, a New York-based marketing and branding expert, thinks he knows: “I think consumers are nervous. I think they’re nervous about how long the economy can continue to hum along before it inevitably reverses course. I think they’re nervous about their credit card bills … And I think the daily grind of negative news about the divided country and feuds in Washington (D.C.) has made shoppers skeptical.”
That last concern was expressed by multiple shoppers interviewed last week at the Westfield Galleria at Roseville shopping mall.
“Yes, I’m very nervous,” said Roseville stay-at-home mom Caroline Miller, 35. “Sometimes, it feels like the country is shaking itself apart … I’m shopping carefully because I’m afraid something awful might happen with the economy.”
Ron Smith, a 41-year-old Rocklin resident, said he was buying his wife “her annual heart-shaped gift” for Valentine’s Day, but the couple were opting this year to forgo dinner at a nice restaurant.
“You know, we’re both kind of antsy about the mood of the country now (and) where it might be heading. We just don’t know … so we are kind of holding back,” Smith said. “And it’s not just us. Friends we go out with say the same thing.”
Pam Goodfellow, principal analyst with Prosper Insights & Analytics, said retailers will respond to this year’s expected consumer pullback with deals galore.
“Consumers can expect promotions on everything from flowers to date-night dinner packages in the coming days, leaving plenty of ideas for those looking to spoil their valentines,” she said.
Consumers can expect promotions on everything from flowers to date-night dinner packages in the coming days, leaving plenty of ideas for those looking to spoil their valentines.
Pam Goodfellow, principal analyst with Prosper Insights & Analytics
A flood of sweetheart deals was evident last week.
ProFlowers, the San Diego-based e-commerce flower company, was offering two dozen red roses for less than $35.
Groupon Inc., which specializes in hooking up local merchants with nearby consumers online, was offering up to $10 off personalized gifts and discounts of 75 percent or more on some gift items.
Macy’s was offering free shipping on Valentine’s Day gifts priced at $49 and up.
West Sacramento-based Raley’s was touting a dozen assorted roses for $19.99 along with an M&M candy jar/balloon arrangement for $10.99.
For Jim Relles, owner of Relles Florist at 2400 J St. in midtown Sacramento, the success of the Valentine’s Day season won’t be measured until the close of business on Tuesday.
“So many people wait until the last minute in our business … even though we tell them to order early and that the flowers will last,” Relles said. “When (Valentine’s Day) is on the weekend, it works better because they’ll have dinner or go for a little drive. It’s different when it comes Monday through Friday.
“I won’t know until Wednesday morning how it all turned out.”
Relles says he’s prepared, with 23 delivery vehicles ready to roll on Tuesday, when he’s “hoping for 700-plus” deliveries.
On Wednesday last week, the NRF projected U.S. retail industry sales to rise between 3.7 and 4.2 percent this year over 2016. However, Shay warned that consumers are likely to remain mindful of developments in Washington, D.C.
“With jobs and income growing and debt relatively low, the fundamentals are in place and the consumer is in the driver’s seat,” Shay said. “But this year is unlike any other. While consumers have strength they haven’t had in the past, they will remain hesitant to spend until they have more certainty about policy changes on taxes, trade and other issues being debated in Congress.”