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An Economy Primed for Consumer Spending

An Economy Primed for Consumer Spending.

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An Economy Primed for Consumer Spending

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  1. An Economy Primed for Consumer Spending • The US GDP increased at a seasonally adjusted annual rate of 3.2% during Q3 2016, the largest increase during the past two years. This and the other metrics in the table on page 1 of the Profiler indicate a good economy for Valentine’s Day 2017 consumer spending. • In its late-November report, The Conference Board stated that the Consumer Confidence Index was 107.1, increasing significantly from October’s 100.8, and the Expectations Index also increased significantly from October’s 86.0 to November’s 91.7. • Then, on December 2, the US Labor Department reported an increase of 178,000 nonfarm new jobs during November, decreasing the unemployment rate to 4.6%, the lowest since August 2007.

  2. Retail Leads the Way • Consuming spending, which represents approximately 70% of the GDP, increased 4.2% during Q2 and 2.8% during Q3 2016, with October showing a strong increase of 0.9% M-O-M and 2.2% Y-O-Y. • The National Retail Federation forecasts a 3.6% increase in holiday 2016 consumer spending, totaling $655.8 billion, although Thanksgiving Weekend sales at brick-and-mortar stores decreased 5.0% and transactions decreased 7.9%. • According to data from the US Census Bureau and Trading Economics, Q1 2017 retail sales are forecast to increase 3.1% Y-O-Y.

  3. Consumers Flock to the Online Channel • Brick-and-mortar store visits may have declined during Thanksgiving Weekend, but online sales Thanksgiving Day and Black Friday increased 17.7% YOY, to $5.27 billion, exceeding the forecast of $5.05 billion. • Of the total of $5.27 billion, $3.34 billion was spent just on Black Friday and $1.2 billion of all Black Friday online sales were via the mobile channel, a 33% increase YOY, and the first day ever that mobile sales exceeded $1 billion. • According to Adobe Digital Insights, “retailers that have invested in mobile, email and social have seen 30% more sales on average and 25% higher average order values.” Undoubtedly, these are the retailers who will be the big winners for Valentine’s Day too.

  4. Finding the Right Gift • The Media Audit’s Spring 2016 surveys for Louisville, KY and Denver, CO were conducted during January and February 2016, and the men 25–64 who shopped at a jewelry store during the past 4 weeks were quite different for the two markets. • Much higher percentages of men 50–54 (25.2% vs. 3.8%) and 55–64 (38.8% v. 12.3%) shopped for jewelry in Louisville than Denver; however, men 25–34 and 35–44 were much higher in Denver than Louisville: 44.5% vs. 9.2% and 39.4% vs. 23.1%, respectively. • Interestingly, men 25–64 who purchased women’s clothing during the past 4 weeks were very similar in both markets, indicating that advertisers in these two retail categories must know their target audiences very well to use their ad dollars efficiently.

  5. Florist and Restaurant Perspectives • With Valentine’s Day 2016 on a Sunday, florists were at a disadvantage, which resulted in 66% of those responding to the Society of American Florists’ post-holiday survey reporting a decrease in sales, and 25% of them said sales decreased 6% to 10%. • Of all surveyed florists, 82% used social media to promote Valentine’s Day; followed by store signage, 70%; email promotions, 59%; online advertising, 57%; early-order incentives, 44%; and print advertising, 43%. • According to data from Foursquare, people were 1.7 times more likely to visit French restaurants and 1.5 times more likely to visit Spanish and Italian restaurants on Valentine’s Day 2015.

  6. Advertising Strategies • Jewelry and clothing stores could market to men a lunchtime promotion, “Shop with a Friend and Lunch’s On Us.” When two or more visit the store at lunchtime and make qualifying purchases, the store provides them with a $20 gift card to a nearby restaurant. • Confectioners/candy stores could appeal to Millennial men by promoting special gift boxes of dark chocolate, low fat or other healthy candy choices, a “Sweets She’ll Want to Eat” promotion. • Stores should aggressively co-promote gift bundles with other Valentine’s Day retailers: delivery of chocolates from a candy store to couples at a restaurant or restaurants providing a confectioner or florist gift card to couples with a Valentine’s Day qualifying meal purchase.

  7. New Media Strategies • Stores can ask customers to upload photo/video of their “Valentine’s Day Moment,” showing the moment a gift was presented. Every customer who posts receives a discount for a future purchase. • Use mobile to promote “Valentine’s Day Procrastinator Specials,” with different specials and discounts during the 24 hours prior to 5 pm on Valentine’s Day, with the deepest discounts during the afternoon of Valentine’s Day to help clear inventory. • With Italian and French restaurants seemingly most popular for Valentine’s Day and the two cultures’ strong romantic identifications, these restaurants can post photos and information showing men how they can be an Italian or French romantic for Valentine’s Day.

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