While some may write it off as a "manufactured" Hallmark holiday, Valentine's Day takes a larger share of shoppers' wallets than any other holiday season except Christmas and back-to-school. Consumers are still being cautious with their discretionary dollars and won't be spreading the love like in years past, but spending is expected to hold relatively steady compared to last year.
Based on the National Retail Federation's (NRF) annual Valentine's Day survey, the average consumer will spend $103.00 this year on traditional Valentine's Day merchandise, up slightly from $102.50 in 2009. However, overall spending is expected to decline by about 4% to $14.1 billion as couples plan to spend less on each other but more on their family, friends, co-workers and even their pets. Not surprisingly, men will spend nearly twice that of women, with the average man planning to shell out $135.35 compared to $72.28 for the average woman.
Traditional gifts remain the most popular, with greeting cards, candy, and flowers most prevalent on Valentine's Day shopping lists. Discount stores will be the top destination this year, with 40.9% of consumers planning to purchase gifts there, followed by department stores (31.1%) and specialty (greeting card/gift, electronics) stores (21.4%).
"While some may view Valentine's Day as cliché, many people still look forward to giving significant others, friends, family and even pets something special," said Tracy Mullin, President and CEO, NRF. "Rather than not give anything at all, consumers will instead focus on small, thoughtful gifts for the people who mean the most to them this year."
While only 16.3% of shoppers plan on buying gifts online this year, Fiona Swerdlow, Head of Research at Shop.org, notes that the online Valentine's Day shopper expects to spend a combined net average of $171.81 on loved ones and friends for the occasion, or two-thirds more than for consumers across all channels ($103.00).
Also, well over a quarter of online shoppers anticipate buying jewelry for the occasion, and expect to spend a net average of $41.34 in this category. That compares with an expected net average spend of $21.52 for shoppers across all channels who plan to buy some bling. Similarly, online shoppers plan to spend more than twice the net average for all shoppers on clothing and gift cards.
Market research firm IBISWorld is slightly more optimistic, predicting Valentine's Day spending will rise 3.3% this year, led by consumers moving from traditional gift-giving towards dining out and romantic getaways. The firm expects total sales to reach almost $17.6 billion, compared to just over $17 billion a year ago.
"Because Valentine's Day lands on a Sunday, restaurants are likely to gain traffic throughout the entire weekend," said Toon van Beeck, senior analyst with IBISWorld. "Furthermore, because President's Day is on the following Monday, many consumers will be able to travel over the three-day weekend, further boosting restaurant sales."
"Many retailers will see Valentine's Day as an opportunity to kick start the new year, but the unemployment rate and continued uncertainty of the economic recovery will hamper growth and expansion," explained van Beeck. "This combined with the fact that the holiday is a discretionary purchase, IBISWorld expects customers to remain on the shopping sidelines for the second consecutive year."
|Category||2010 (millions)||2009 (millions)||YoY % Chg|
|Dining Out||$ 8,508.30||$ 7,863.50||8.2%|
|Candy||$ 2,466.80||$ 2,499.30||-1.3%|
|Romantic Getaway||$ 2,047.00||$ 2,001.00||2.3%|
|Flowers||$ 1,355.20||$ 1,425.00||-4.9%|
|Jewelry||$ 1,308.60||$ 1,371.80||-4.6%|
|Clothing & Intimate Apparel||$ 1,126.80||$ 1,106.90||1.8%|
|Greeting Cards||$ 784.30||$ 770.40||1.8%|
|Total||$ 17,597.10||$ 17,037.90||3.3%|
source: IBISWorld 2010 Valentine's Day spending forecast
According to the Society of American Florists (SAF), Valentine's Day is the No. 1 holiday for florists, capturing 36% of holiday transactions and 40% of dollar volume. The group estimates 187 million roses were produced for the holiday in 2009. Florists will be feeling the love once again this year – 58.4% of male respondents to the NRF survey indicated they will be giving flowers to loved ones, and IBISWorld forecasts consumers will spend over $1.35 Billion on flowers this Valentine's Day.
Greeting cards will be the gift of choice among women this year according to the NRF survey, with 62.3% of female consumers saying they will give someone a card this year. According to the Greeting Card Association (GCA), Valentine's Day is the second most popular card-sending occasion in the U.S. after Christmas, with an estimated 190 million valentine cards exchanged every year. When children's classroom-exchange valentines are included, the GCA estimates that approximately 1 billion valentines will be opened in the U.S. in 2010. Valentine's Day is also the largest e-card sending occasion of the year. An estimated 15 million e-valentines will be sent in 2010.
And what would Valentine's Day be without candy? The National Confectioners Association (NCA) says nearly $1 billion in candy is sold for the holiday (at food, drug and mass merchants excluding Walmart), trailing only Halloween, Christmas, and Easter spending. Meanwhile, Nielsen estimated that consumers would buy more than 58 million pounds of chocolate candy last year, ringing up $345 million in sales and accounting for 5.1% of total annual sales.
While the economy is certainly better than one year ago, consumers are still extremely concerned about their own personal finances. According to PayPal's fourth annual "Can't Buy Me Love" survey, nearly half of shoppers plan to spend less than $50 this Valentine's Day, compared to 2008, when 75 percent of shoppers planned to spend more than $50 on gifts. More than a quarter (27%) of respondent families experienced significant financial change in the last year. Of these couples, at least one partner had to take on an additional job, or the primary breadwinner had to change jobs.
Most merchants probably won't be celebrating their results after the love-fest is over, but this holiday should provide more evidence the spending environment is slowly improving. With expectations of an elevated unemployment level and weak housing market through the middle of this year, consumers will continue to be extremely cautious with their spending.