WRONG: As Christmas Shopping Disappoints, AP Claims 'Cheap Is the New Chic'

December 23rd, 2015 7:02 PM

The desperation is palpable at the Associated Press, aka the Administration's Press, over how the Christmas shopping season is going.

Having appearently learned something contrary to the "consumers will catch up with their spending" we've been hearing from the National Retail Federation and others so far, AP Business Writer Joyce M. Rosenberg shifted gears and decided that consumers are spending less this year on individual gifts because, well, "Cheap is the new chic." Having spoken with one of Rosenburg's sources, readers can be assured that "chic" has absolutely nothing to do with it.

Here are the related paragraphs from Rosenberg's ridiculous writeup (bolds are mine):

HOLIDAY SHOPPING 2015: CONSUMERS BUYING LESS EXPENSIVE GIFTS

Cheap is the new chic for holiday gifts.

... For nearly a decade, shoppers have been more cautious and practical about their spending, doing more bargain shopping and hunting for deals. But recently, shoppers have taken that practice a step further.

They're becoming more open to buying gifts that in the past might have been considered downright cheap. So, they're not just looking for big discounts on extravagant, expensive designer and brand name goods; they're starting out with the intention of getting less expensive items that they might not have considered buying as gifts in the past.

The number of people willing to buy gifts during this holiday shopping season for under $10 rose to 4 percent this year from 1 percent last year, according to a survey of 1,000 people by America's Research Group, a firm that researches consumer behavior. Meanwhile, the number of people willing to spend between $26 and $35 fell to 18 percent from 22 percent. (Note: This final sentence of this paragraph does not square with what Britt Beemer of America's Research Group told me. — Ed.)

Rosenberg wants to convince us that this move to "cheap" is a good and noble thing (numbered tags are mine):

... The shift in attitude toward cheap is partly rooted in economics, says Jeff Green, a retailing consultant based in Phoenix. Shoppers who vigilantly watched their budgets during the recession continue to feel the pressure of keeping tabs on what they're spending even as the economy improves. [1] "Even with the unemployment rate down, I don't think people feel secure in their jobs," he says. [2]

But it's also rooted in a change in consumer psychology. Some shoppers have become suspicious of retailers who continually slash prices, [3] retail consultant Paco Underhill says.

... Adding to the mistrust of "deals," some consumer marketing experts say, is the shedding of the stigma associated with buying smaller, less expensive gifts. People who spend less can be perceived as savvy shoppers, and also warmer and friendlier [4] than someone who's a conspicuous consumer, says Maura Scott, a marketing professor at Florida State University.

... The growing willingness of holiday shoppers to spend less on gifts has made storeowners more conservative as they've stocked up for the holidays. [5] Many have more lower-priced merchandise on their shelves to cater to the growing prevalence of cheap-gift buyers.

Notes:

[1] — Rosenberg is taking it as a given that the economy has improved and continues to improve. As will be seen below, a large number of Americans, by their behavior, are showing that they disagree.

[2] — People don't feel secure in their jobs for several reasons. One is that the economy, with the worst post-recession "recovery" since World War II, really isn't that strong.  Second, there are millions of people who are inexplicably considered not part of the "civilian workforce" who remain quite interested in working, and would jump at the chance to take their place.  Third, it's not exactly a secret that the "legal" and illegal immigrant floodgates are wide open, and that too many blue-collar and white-collar employers are taking the easy way out and hiring illegals.

[3] — Though consumers appear to be a bit more aggressive in searching out discounts this year, their wariness of "sales" is hardly a new phenomenon.

[4] —Here's where Rosenberg and the other "experts" she consulted went completely off the rails, as will be seen below.

[5] — This contention runs a bit counter to information seen elsewhere telling us that desperate retailers have had to slash prices by at least 50 percent and often more just to move the merchandise. If retailers had the right mix of cheap and pricey stuff, that wouldn't be happening.

While one could certainly argue that a less materialistic and more substantive outlook on Christmas gift-giving would be a favorable development for both givers and receivers, that is not driving what is happening.

In a conversation this afternoon with Britt Beemer of America's Research Group, the person Rosenberg consulted for her information on spending plans, I learned the following. I don't doubt for a minute that Beemer would have been willing to share this information with Rosenberg (or maybe he did, and she chose to blow it off because it doesn't fit the narrative):

  • The percentage of Americans willing to buy gifts of $35 and under increased to 54 percent this year from 49 percent. Beemer, who has over three decades of experience in the industry, considers that a near-seismic shift.
  • Beemer is right. I have roughed out the full range of spending plans and percentages Beemer provided. If they are accurate, and assuming that the total number of presents bought increases by 1 percent, they would presage a drop of perhaps 1 percent or even 2 percent in Christmas shopping season spending this year compared to last year. That's a very far cry from the original +3.7 percent the National Retail Federation continues to predict, which Rosenberg cited, and which Beemer strongly doubts. Ironically, reflecting the growing wealth and income equality seen during the Obama years, which is arguably caused by Obama administration policies, a lot depends on how much over $100 the average person in the top survey range spends, as that group increased from 2.2 percent to 3.1 percent of Americans this year.
  • The percentage of parents who indicated that they cut back or eliminated presents for themselves and spouses or partners to ensure that they would be able to afford to buy presents for their children has increased from 20 percent in 2012 to 44 percent in 2015 — a level slightly higher than in 2010, the first full calendar year after the recession ended (also the first year Beemer says he began asking the related question).
  • Ten years ago, clothing wasn't even in the top ten in the list of Christmas presents parents and guardians bought for their children. Now it's in the top 3, indicating that parents are to an extent gaming their gift-giving by putting things in Christmas gift boxes that they would have had to buy in the near future anyway. In a related stat, 22 percent of parents spent the highest amount of kids' Christmas gift dollars on clothing, up by about 4.5 points from last year.
  • While it's true that more people are procrastinating this year, 27 percent of respondents say that they are doing so because they simply don't have the money to buy presents yet, up from 22 percent last year. Meanwhile, the percentage of people saying that they haven't had the time to shop has dropped by 10 points to 24 percent, and the percentage saying that they just don't know what to buy their recipients has increased by 5.5 points.

The bottom line — an assessment shared by Beemer — is that Americans on the whole are self-reporting Christmas shopping season behavior which resembles that seen during recessions.

It doesn't have a darned thing to do with "chic," or less "stigma," or being perceived as "savvy shoppers." It's an insult to one's intelligence to see an AP reporter pretending that it does.

Cross-posted at BizzyBlog.com.