Business

No More Americans Will Buy Holiday Gifts This Year

Donna Hilliard, chief executive of Code Tenderloin, said the nonprofit group serving the homeless is now in more demand than ever.

Source: Code Tenderloin

Code Tenderloin, a nonprofit group serving the homeless in San Francisco, said it has about $ 7,000 worth of gift cards to give out to those in need of extra financial help over the holidays.

In recent weeks, requests for food, clothing and gifts have been received from members of the community. Others are simply looking for Code Tenderloin’s help to put a roof over their heads on a rainy evening. According to Donna Hilliard, chief executive of Code Tenderloin, these requests are likely to only grow as the holiday season drags on.

“While everyone is living their daily lives, very excited about this holiday season, we have a whole community of people who are under stress,” Hilliard said in a telephone interview. “We are seeing more demand this year than ever before.”

The momentum shown by Code Tenderloin in San Francisco speaks to the growing wealth gap, which only widened during the Covid-19 pandemic and will be especially evident during the holidays. Sales forecasts ahead of the holidays are rosy: The National Retail Federation, the industry’s largest trade group, says a historic increase of 8.5% to 10.5% over last year. But growth is largely driven by the wealthy segment of consumers. Meanwhile, according to one survey, a record large number of people do not expect gifts from them.

“ People are going crazy ”

“This story of two holidays is a pretty good reflection of the story of two pandemics, right?” said Stephen Rogers, executive director of Deloitte’s Consumer Industries Division. “What starts with a health crisis turns into a financial crisis if you live in low-income populations. [bracket]… “

“Those of us with the 401k investment have done well,” he said. “You can see that from 2019 to 2021, the lower income group will spend almost half of what they used to spend. And the higher-income group is almost double what they spent two years ago. ”

Households bringing in more than $ 100,000 a year will shell out $ 2,624 apiece on this holiday, up 15% from 2020, according to a Deloitte study. While low-income groups that earn less than $ 50,000 a year plan to spend $ 536 per family, down 22% from a year earlier.

The big spend disguises those who don’t spend

Kartik Iswar, an assistant professor of consumer psychology at Georgetown University’s McDonough School of Business, agrees that the economic impact of the pandemic has been dramatic and uneven.

For some Americans, this meant losing their jobs, extended vacations, or additional health risks as they worked on the front lines of hourly retail. For Americans working as white collars, this simply meant moving from a company office to a home location. Meanwhile, these workers cut savings from canceled vacations, summer camps and other activities as the value of shares in their retirement accounts soared.

“We have all experienced a pandemic, but some of them were very different for different segments of our society – especially for our workforce,” Ishwar said. “We are still seeing the consequences of this.”

However, several key economic indicators point to a recovery. The unemployment rate fell. There is more vacancies than people who want to fill them. And a busy job market means that many employers are raising wages and offering pleasant perks. Macy’s, for example, is investing $ 35 million over the next four years to provide its employees with an educational program that will cover 100% of the cost of tuition, textbooks and fees.

But this holiday season will continue to play an economic divide in those who can afford to spend lavishly and those who feel they have very little room to spend, Ishwar said. Some retailers will cater to major sponsors. Their costs, coupled with higher prices, are likely to mask a downturn among financially needy consumers, he said.

“There are consumers who want to spend a lot. And if I spend $ 5,000 on a trip to Disney, and then a few thousand dollars on fancy and expensive gifts for my family, or buy a new car … that outweighs the many people who don’t spend the $ 700 they usually spend, ”Ishwar said. …

One of the items in Neumann Marcus’s holiday catalog this year is the champagne vending machine, which retails for $ 38,000. The company said it has already sold several units.

Source: Neiman Marcus

Renowned for its wealthy customers, Neiman Marcus publishes a festive catalog every year featuring incredible “fantastic” gifts. Copy of this year includes a 30.86 carat diamond called the Heart of the Mughals, which is worth $ 6.1 million. Among the items listed is the Moet & Chandon Champagne Vending Machine, which retails for $ 38,000. The department store said that several units have already been sold.

Lana Todorovic, president and chief merchandiser for Neiman Marcus, said the company has seen its customers take advantage of their holiday shopping this year and spend more money on each transaction.

“We are seeing a lot of activity, which is happening earlier and more actively than in previous years, which really speaks of their anticipation and excitement,” she said. “We also sell a huge amount of dresses and gowns and our tuxedo sales are extremely high.”

Some retailers try to keep prices low.

“This is our goal,” Walmart CEO Doug McMillon told CNBC’s Squawk on the Street. “We save people money and help them live better lives. These words came from [Walmart founder] Sam Walton’s mouth. He loved to fight inflation. And so do we. “

Inflation was widespread – even dollar stores had to add value. Dollar Tree is raising its floor to $ 1.25 in an attempt to offset the pressure it faces from higher transportation costs. But he still thinks the slightly higher price is competitive.

“We believe that at $ 1.25 it will still be an undeniable value due to the fact that [shoppers are] “Watched the market,” Dollar Tree CEO Michael Witinski said this week during a teleconference.

A separate study by Deloitte found that of 70% of people who had already started their holiday shopping by the end of October, 54% said they saw higher prices than last year. And about a third of consumers said they’ve increased their holiday budgets from what they planned for September. Deloitte surveyed 1,200 consumers from October 21-25.

But not everyone has the same flexibility to simply decide to spend more money.

“This will be challenging for a significant number of people,” said Rod Sides, vice chairman of retail at Deloitte. “When the prices of gas, food and the like continue to rise at the same rate as we are seeing, there is uncertainty that says,“ I probably don’t need to spend money on this particular item because now I have to cover my rent. and maybe I haven’t done it before. “

Apart from price sensitivity, there may also be some consumers who are on vacation because they are still afraid of a pandemic, Ishwar said. Either they’ve lost a loved one to the coronavirus, or they’re still nervous about getting it.

“Should I go to a store or place an order online? Go to a big holiday party or not? ” … It will go a long way in consumer behavior this year because we are all struggling with this balance, ”he said.

Before moving on to the giveaway and gift card distribution, Code Tenderloin said it is trying to collect enough turkey poults this week to prepare a Thanksgiving meal.

“We’re just falling asleep,” said Del Seymour, CEO of Code Tenderloin. “And this is an extremely wealthy city.”


Source link

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button