Valentine’s Day Shows No Love for Retailers … and the Feeling is Mutual
Valentine’s Day is rapidly approaching, and retailers everywhere are feeling the pressure. In 2019, Valentine's Day shoppers spent an impressive $20.7 billion on candy, bling, teddy bears, flowers, and other romantic gifts, according to the National Retail Federation. From new marketing campaigns, new promotions, and big, attractive discounts, retailers and e-tailers alike are trying to boost sales and stay a step ahead of Cupid. With consumers expected to spend even more in 2020, it seems like all retailers want a piece of the action.
Or do they?
The numbers look appealing on paper, but the findings of a recent study suggest not all retailers are in love with this so-called Hallmark holiday.
An Outlook on Shoppers
The Pearl Source, one of the largest jewelry e-tailers in the U.S. by revenue, recently polled 1,000 men and women in a census-weighted survey regarding their expectations and shopping habits for Valentine’s Day 2020. Nearly a third of respondents said they could do without the holiday; in fact, 30 percent of respondents said the holiday is unnecessary and forces them to spend money when they otherwise wouldn’t. A bit more than 15 percent of consumers said they would strike the holiday from their calendars altogether if they could.
The lack of enthusiasm for Cupid largely came down to finances. More than 35 percent of respondents said the holiday puts financial strain on them. More than a quarter of survey participants said they have to take on credit card debt, borrow from a friend, or pick up an extra shift (or overtime) at work to celebrate the holiday. An additional 14 percent said they were already in debt from holiday season shopping, which was adding to the strain.
Will consumer disdain for Valentine's Day translate to fewer dollars spent? Time will tell. Either way, retailers are in a bind.
No Love From Retailers, Either
As it turns out, many retailers don’t seem to be too thrilled with the holiday, either. The study also asked 500 independent retailers and e-tailers to weigh in on Valentine’s Day. Marketers and e-commerce managers made up the bulk of the respondents. A whopping 68 percent agreed that they would prefer to ditch targeted holiday initiatives altogether, while 70 percent stated they felt pressured to spend more to promote deep discounts, existing promotions, and special product lines in time for the holiday.
Once again, it all came down to the dollars; retailers and e-tailers said they had to increase their spend considerably to attract consumers around this time of year, and that’s eating into already slim margins on items like chocolate, flowers, clothing, jewelry, and more. According to Mediapost, companies spent 23 percent more on online search advertising even though consumers only spent 5 percent more on online purchases. Here’s how much additional spend study participants said they had to add to their marketing and e-commerce budgets for Valentine’s Day:
- $500 - $1,000: 14 percent
- $1,001 - $2,500: 21 percent
- $2,501 - $5,000: 35 percent
- $5,001 - $10,000: 28 percent
- $10,001 - $25,000: 1.5 percent
- >$25,000: .5 percent
That means the majority of respondents tacked on at least an extra $2,500 bucks to their marketing spend, not exactly a small chunk of change for a small retailer or e-tailer, especially if consumers aren’t spending that much more to begin with. In fact, 90 percent of the retailers questioned for the poll said Valentine’s Day wasn't a lucrative holiday for their brand, mostly blaming a combination of consumer spending patterns (or lack thereof), deep discounts and promotions to attract attention, and increased competition that drives up costs for keyword bidding, pay-per-click ads, etc.
High End Hurts More
If retailers selling traditional Valentine’s Day gifts — flowers, candy, clothing — are taking a hit, retailers and e-tailers dealing in high-end merchandise are getting hit even harder. At The Pearl Source, Valentine’s Day is largely a miserable experience because, by and large, consumers made their jewelry purchases over the holidays. Rings, earrings, necklaces, and more are snatched up around Christmas, and consumers never really look back. All the advertising money can buy is still rarely a compelling enough reason to revisit jewelry for Valentine’s Day.
This has proven true for other luxury retailers as well. Handbags, fashion accessories, ticket sales, and more all tend to slump after the holiday rush. Many marketers have posted their thoughts on the subject, ranging from ways to combat the slowdown to boosting holiday sales to offset what you presumably can’t avoid.
Retailers are likely going to continue to get behind Cupid … as long as consumers keep spending. But it seems that this year, both consumers and retailers may be falling out of love with the holiday a bit. If Valentine’s Day 2020 ends up slumping considerably, retailers and e-tailers can and should consider dialing back spend for the following year. At some point, the numbers just don’t make sense anymore, and this year we could see consumers tip the scales against Cupid.
Leon Rbibo is the president of The Pearl Source, one of the largest online pearl jewelry retailers and distributors in the United States and a leading Foundation Member of the Cultured Pearl Association of America.