An Experiment in De-Commercializing the Holidays

The average U.S. Consumer is planning to spend $750 on gifts this year, in addition to a few hundred spent on themselves while combing through all of those unbelievable deals.

Exorbitant holiday gift spending is as American as apple pie, but it is one tradition that we would be better off for if it were to go the way of the dodo.

The reality is Black Friday, the wonderful new Black Thanksgiving, and the ensuing weeks are really just “open season” on our bank accounts. We think we’re the ones doing the hunting – but sometimes the hunter becomes the hunted.

I appreciate the value of giving something of sentimental significance. I also am a big fan of giving gifts that save money. Or gifts that give an experience to enjoy.

But the large majority of holiday spending does not come in these forms. It comes in the form of buying others a bunch of crap off of their wish list (in which case they should buy themselves) or crap you think they want (which they probably don’t). It’s a terribly inefficient process. No matter how accurate your gifter is, they could never be as efficient as you are in buying only the stuff that you need, and vice versa.

So the holidays become this inefficient commercial exchange that leaves everyone with a bunch of stuff that has no sentimental value, no use, and the resulting guilt.




The No Gift Proposition

Back in 2009, I proposed cutting off holiday gifting between my wife and I. She was 100% in agreement.

We then started a quest to de-commercialize the holidays (and birthdays) in our families.

We told them that we wanted to de-clutter our lives and of our desire for the holidays to be more about the tradition of spending time together versus consumption and the associated stress and waste. We wanted it to be Thanksgiving: Part 2 (the pre-Black Thanksgiving version). Food, drink, family, and relaxation! And we wanted our birthdays to be the same way.

At the time, the idea just didn’t catch on. My side of the family said they liked the idea, but then went ahead and bought some crap anyways (probably out of guilt or habit). Her side of the family couldn’t comprehend it, and we felt somewhat resigned to defeat.

But we kept spreading the message.

The New Tradition

Three holiday seasons later, the picture has completely changed.

Last year saw no gifting on my side of the family, with the exception of a few bottles of wine and some food.

On my wife’s side of the family, we’ve turned git giving in to a combination of donating to a local charity and a white elephant exchange.

Gone are wish lists, gift cards, and all the stuff.

In effect, we’ve started a new tradition. And no one seems to miss the old one. In fact, something about the white elephant makes it much more fun and rewarding than traditional gift giving.

In the process, our families have increased our collective net worth by thousands, we have less clutter, less stress, and a more satisfying time together.

Even if unpopular and first met with resistance, some new traditions are worth starting.

No-Gift Discussion:

• Have you pursued a similar idea with your family? What was their reaction?
• If you’ve been successful in de-commercializing the holidays, do you have any recommendations for others interested in doing the same?

source: 20somethingfinance.com

Why Retailers Can’t Wait Until Election Day

Retailers are known to play the blame game when it comes to their sales numbers. They will point the finger at Mother Nature for being too hot or rainy, Hollywood for releasing a blockbuster and distracting shoppers and even consumers themselves for being too bargain hungry, hurting their margins. But they might have a legitimate excuse during the campaign season.

According to ShopperTrak, shopping activity decreases during a campaign cycle. During the 2004 presidential election, retailers experienced a 0.7% year-over-year decline in sales and a 2.2% drop off the week before Election Day. In 2008, foot traffic dropped off 3.7% the week before the election and 6.3% the week of the election, when compared with the same period the year before.

“As we get closer to the day, retailers will struggle to find air time between all the political aids running and get consumers’ attention,” says Bill Martin, ShopperTrack’s founder. “Consumers get bombarded and consumed with the election coverage…just look at the first debate, it brought in 60 million viewers who weren’t out shopping.”

Shoppers tend to go “on hold” during the campaign, according to Pam Danziger, president of Unity Marketing. “People are on pins and needles, everybody has a hat in the game and that shifts their primary focus to necessity buying — they are still going to need milk and gas, but they tend to put on hold shopping trips and weekend getaways until they know who is going to be elected.”

Thankfully for retailers, Martin says the pent-up demand will make up for the lost revenue. “We see it released immediately after the election no matter which party wins. Be prepared for the weekend following the election to be a big shopping day -- that will be the start of the holiday season in earnest.”

While retailers might enjoy the boon, it might be short lived. According to Steve Pruitt, founder and senior consultant of Blacks Retail, there is a pattern of down sales the year after an election. “Every year since 1950, except for two in which the economy was experiencing a recovery, there was a downturn in retail sales. I expect the rate to slow for sure in 2013 and it could go negative based on the ineptitude of the government.”

Spending Power

American Express Publishing and Harrison Group released a study this week highlighting that holiday spending will tick up 33.5% to $3.4 billion among the top 1% of earners. On the flip side, the study showed the rest of consumers planning to spend 3.4% less this season.

“When you look at raw data, retail is up 5% year-over-year, and that’s a big number, but if you look at this same time last year, it was up 7.5% from 2010, so the real question is how strong is this recovery?” says Danziger.

She points out that the middle-class's drop in income puts more pressure on the economy and  on retailers to attract wealthy shoppers. 

“The middle class has seen its income drop 4% and that is a terrible sign for retailers and the economy. The affluent ones are the ones who have the money left and can turn on and off the spigot in terms of spending, and if they feel embattled or under attack from the White House they aren’t going to spend as much. They can afford to hold out.” 

Experts agree that the election process weighs more heavily on retailers than the results — it’s  the certainty of knowing who will occupy the Oval Office that will calm fears.

“Retailers looking into future investments want to have a clear direction and if they don’t see a clear picture then they won’t do anything, they hold back, which holds back growth,” says Pruitt. “Businesses aren’t going to take risks over growth if they don’t know what is going to happen.”

Bargain-seeking shoppers worried about the election over shadowing or reducing Black Friday advertisements don’t need to fear. Black Friday has become so engrained in our society that nothing will impact the deals and the two weeks after Election Day and the shopping event is plenty of time to spread the word.

“When you think about all the people sitting around the Thanksgiving table the conversation will eventually roll around to how early people are setting out and what they are trying to get. It’s know part of the holiday,” says Martin.

source: foxbusiness.com

Best Credit Cards for Holiday Spending

Figuring out how you will pay for holiday purchases is as important as selecting the right gifts. For example, if you prefer to spread out payments, a no-annual-fee card with a 0% introductory interest rate could be just the thing.

Citibank offers three no-fee cards with a 0% rate on purchases and balance transfers lasting from 15 to 18 months. (You pay a 3% balance-transfer fee.) The Citi Diamond Preferred card (full rate: 11.99% after 18 months) provides access to person­alized concierge services that can help you book hotel rooms and flights. The Citi ThankYou card (full rate: 12.99% after 15 months) awards one ThankYou point for every $1 spent. Points may be redeemed for gift cards, travel rewards or cash. The interest rate on the Citi Simplicity card (full rate: 12.99% after 18 months) won’t increase even if you pay late.

If you pay off your entire balance each month, you may prefer a rewards card that offers a 0% intro rate plus a 5% rebate on varying categories of purchases. The new no-fee U.S. Bank Cash+ Visa Signature card (0% for six months, then 13.99%) allows cardholders to select two purchase categories each quarter for which they will earn 5%. You may also choose a category that will earn you 2%. All other purchases earn 1%. The no-fee Discover More card (0% for 15 months, then 10.99%) offers a 5% cash-back bonus on purchases in categories that rotate quarterly. With the no-fee Chase Freedom card (0% for 15 months, then 12.99%), you earn 5% on up to $1,500 spent on airline fares and hotels -- and at Best Buy and Kohl’s through the end of December.

source: kiplinger.com