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In the Spirit of Shopping

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Christmas is forever, not for just one day,
for loving, sharing, giving, are not to put away
like bells and lights and tinsel, in some box upon a shelf.
The good you do for others is good you do yourself...

—Norman Wesley Brooks, Let Every Day Be Christmas, 1976

As you put up your Christmas trees, buy gifts for loved ones, and sing carols at five in the morning, here’s something for you to ponder this holiday season.
It’s been a tough two years (2008 and 2009). How do you think the Christmas spirit, Christmas spending, and Christmas gift-giving have fared amid all the crises? Can people still get in a Christmas mood? Are they spending the part? Are they giving gifts like they used to? To answer these important holiday questions, let’s take a look at some research.

Christmas Spirit Index

The Christmas spirit isn’t immune from economic ups and downs, but it holds up quite well despite the downturn. The Christmas Spirit Foundation, a Missouri-based, non-profit that promotes the Christmas spirit for kids, families, and the environment, did some research on what they call the Christmas Spirit Index.

The index is based on 15 indicative Christmas practices classified according to experiential activities (e.g., exchanging gifts and decorating a Christmas tree), spiritual activities (e.g., reading the Bible), and charitable activities (e.g., giving money to the less fortunate).

The results: The Christmas Spirt Index declined by 6.6% in 2008. However, compared to the whopping 42.3% decline in the Dow Jones Industrial Average, 6.6% isn’t bad at all.

Leading the decline in the Christmas spirit are drops in the mailing of greeting cards (minus 8%), decorating a Christmas tree (minus 3%), creating a memory scrapbook (minus 4%), and giving money to the less fortunate (minus 2%). Which leads us to the question: While Christmas spirit is relatively inelastic to economic performance, does this mean that Christmas spending is too?

Unfortunately not.

Income-Christmas Spending Curve

Data from the New Hampshire-based market research company American Research Group Inc. (ARG), shows a 50% decline in average Christmas consumer spending from US$859 in 2007 to US$431 in 2008. This is the lowest ever recorded level of planned spending since 1991.

No matter how we split the data, we see the same grim spending picture. From the same ARG report, we find data that shows how 50% of Christmas shoppers will wait for a sale to do their Christmas shopping—and only 14% are willing to pay full price.

While the percentage of sale-only shoppers has remained relatively constant, the percentage willing to buy at full price has dropped from 4 points from a 10-year average of 20%. This means that more people are conscious about the price at which they pay for holiday gifts and other giveaways.

Both sets of shoppers—full price and sale-only—have reduced their Christmas budgets. Full-price shoppers now plan to spend only US$602 compared to US$1068 in 2007 and US$1093 in 2006. On the other hand, sale-only shoppers intend spend a mere US$316 compared to US$724 in 2007 and US$616 in 2006, declines of 43% and 56%!

Christmas Shopper Motives

Here’s the good news. As Christmas shoppers spend less, they haven't changed WHY they shop.

According to 2006 research from the Impact Lab, of the US$791 consumers planned to spend for Christmas shopping that year, US$451 (or 57%) will go to family, US$99 (13%) will be personal purchases, and US$86 (11%) will be for friends. While the SELF is among the top three beneficiaries of Christmas shopping, more than 80% of total Christmas spending actually goes to other people—whether directly as gifts or indirectly in the form of greeting cards and postage fees.

Data from National Retail Federation in 2008 still reflects OTHERS as the primary beneficiary of Christmas spending. While, due to a tough economic environment, Christmas shoppers have rolled back spending, they’re still living the Christmas spirit and spending their Christmas piggy banks, albeit reduced, on loved ones and the less fortunate.

Crises come and go but what’s fundamentally important in life remains, as it should be, unchanging. Merry Christmas, everyone! I’ll see you in the New Year!

Print ed: 12/09


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