Valentine’s Day shoppers are expecting to give their wallets a break this year and that self-control is likely to cause a $1.5 billion decline in retail sales.
Nearly 7,600 shoppers told the National Retail Federation in an annual survey that they intend to spend about $137 on Valentine’s Day gifts this year, down from last year’s record-setting average of about $147. While this change may be marginal for consumers, total sales for the romantic holiday are expected to drop to $18.2 billion this year, down from $19.7 billion in 2016 — another record.
Despite the significant decline, NRF’s president and chief executive officer Matthew R. Shay said the holiday is still a boon to retailers, “even if consumers are being more frugal this year.”
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Shay added, “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.”
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During the winter holidays, shoppers actually spent $711 on gifts even though they planned to spend $27 less, according to a January survey by the International Council of Shoppers, which found the increase led to a 16 percent rise in sales over 2015.
As for Valentine’s Day, one reason for the decrease in expected sales could be due to fewer people planning to celebrate the holiday at all. Of those surveyed, the NRF found that 10 percent fewer shoppers have any intention of celebrating love through gifts this February, compared with a decade ago.
Another source of the decline could be the rise of experience or experiential gifts, like concert tickets, sporting events or outdoor trips, which the NRF said 40 percent of Valentine’s Day participants want to receive this year, although only 24 percent intend to give such a gift.
Consumers seem to have an increasing affinity for experiences instead of “things,” especially shoppers that fall in the Millennial or Gen Y age bracket. Last year, an eMarketer study found that 61 percent of Millennials said an experience was more important than owning a possession.
Another study by Eventbrite found that 78 percent of Millennials would “choose to spend money on a desirable experience or event over buying something desirable,” while more than half of those surveyed said they’re spending more on events and live experiences “than ever before.”
Steve Kraus, chief insights officer at market research firm Ipsos, also pointed recently to affluent consumers, roughly the top 25 to 30 percent of earners in the U.S., as another group that values “things” less and less and again, is more willing to spend on experiences.
“The biggest differences in spending are in experiential categories, such as travel,” Kraus told eMarketer in January. “When it comes to luxury, affluents would rather go on a luxury vacation than buy an expensive watch or piece of apparel.”