No more Americans will buy holiday gifts this year

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Donna Hilliard, executive director of Code Tenderloin, said non-profit organizations that provide services to the homeless are seeing more demand than ever before.

Source: Code Tenderloin

Code Tenderloin, a non-profit organization that provides services to the homeless in San Francisco, said it has gift cards worth about $7,000 that can be distributed to those who need additional financial assistance during the holidays.

In recent weeks, community members have asked for food, clothes and gifts. Others just sought help from Code Tenderloin to put a roof on their heads on a rainy night. Donna Hilliard, executive director of Code Tenderloin, said that these invitations may only increase as the holidays drag on.

Hilliard said in a telephone interview: “Although everyone is living their daily lives and is very excited about this holiday, we have a group of people under pressure.” “We see more demand this year than ever before. many.”

The developments witnessed by Code Tenderloin in San Francisco illustrate a larger gap between rich and poor, which will only increase during the Covid-19 pandemic, especially during the holidays. The forecast for holiday sales is optimistic. The National Retail Federation, the largest trade organization in the industry, called for a historic increase of 8.5% to 10.5% over the same period last year. But the growth is mainly driven by a part of affluent consumers. At the same time, a survey showed that the number of people who did not want to receive any gifts hit a record high.

‘People are terrified’

The rising prices of fuel, groceries and other commodities have put pressure on many shoppers. According to the University of Michigan Consumer Confidence Index, consumer confidence hit a 10-year low in November as inflation climbed to its highest level since the early 1990s. Shoppers are spending, but they are increasingly worried about opening their wallets.

Hilliard said: “People who were already struggling before the pandemic are really struggling now.” “Now everyone who has run out of stimulus measures has come in. Now the rent moratorium is over, people I was terrified.”

According to a Deloitte survey, during this holiday, 11.5% of people plan to spend the season by not spending any money on gifts, gift cards or other entertainment items. As long as the consulting company has been tracking, this is a record number of wait-and-sees.

Deloitte found that during this holiday period, high-income families will spend five times as much as low-income families. The consulting company surveyed 4,315 consumers on their holiday shopping plans between September 7 and 14.

Stephen Rogers, Executive Director of Deloitte’s Consumer Industry Division, said: “This story about two holidays reflects the story of two epidemics, right?” “If your income is low, the health crisis will Is it a financial crisis? [bracket].”

“Those of us who invested in 401ks did a great job,” he said. “You can see that from 2019 to 2021, the low-income group spent almost half of what they had spent in the past. The high-income group spent almost twice as much as they spent two years ago.”

Deloitte’s survey found that families with an annual income of more than US$100,000 will pay US$2,624 per person during this holiday, an increase of 15% over 2020. Low-income groups with an annual income of less than US$50,000 plan to spend US$536 per household, which is 22% lower than the same period last year.

Cover up those who don’t spend money

Karthik Easwar, an associate professor at Georgetown University’s McDonough School of Business who specializes in consumer psychology, said he agrees that the economic impact of the pandemic is obvious and uneven.

For some Americans, this means they work in front-line retail positions by the hour, which means unemployment, long vacations or increased health risks. For Americans working in white-collar jobs, this simply means moving the office location from the company office to the home office. At the same time, as the value of stocks in retirement accounts grows, these workers withdraw savings from cancelled holidays, summer camps, and other activities.

Easwar said: “We have all experienced the pandemic, but for different parts of our society, especially our workforce, some experiences are very different.” “We still see the impact.”

However, several key economic indicators indicate a recovery. The unemployment rate has fallen. There are more vacancies than there are people hoping to fill the vacancies. The tight labor market means that many employers are raising wages and benefits. For example, Macy’s will invest 35 million U.S. dollars in the next four years to provide its employees with an education program that will cover 100% of tuition, textbooks, and miscellaneous fees.

Easwar said, but the economic divide will still play out this holiday season, that is, those who can afford to spend money, and those who feel that they have little room for consumption. Some retailers will cater to large-scale consumption. He said that their spending and higher prices may mask the decline of financially struggling consumers.

“Some consumers want to spend a lot of money. If I spend $5,000 to travel to Disney and then spend a few thousand dollars on fancy and expensive gifts for my family, or buy a new car… This will exceed what many people would normally spend without spending. Of 700 dollars,” Easwar said.

One item in this year’s Neiman Marcus holiday catalog is a champagne vending machine with a retail price of $38,000. The company said it has sold several vehicles.

Source: Neiman Marcus

Known for its wealthy shoppers, Neiman Marcus has launched an annual holiday catalog with top “fantasy” gifts. This year’s copy includes a 30.86 carat diamond called the Heart of the Mughal, which sells for up to 6.1 million US dollars. Among the items listed is a Moet & Chandon champagne vending machine priced at $38,000. The department store said it has sold several.

Neiman Marcus president and chief marketing officer Lana Todorovich (Lana Todorovich) said that the company has seen its customers take advantage of this year’s holiday shopping and spend more per transaction.

“We have seen many activities earlier and more active than in previous years, which really shows their expectations and excitement,” she said. “We also sell a lot of dresses and dresses, and our tuxedo sales volume is very high.”

Some retailers try to keep prices low

However, on the other end of the pricing pendulum, discount retailers and dollar stores are trying to reduce costs for shoppers with limited budgets.

Last week, Wal-Mart CEO Doug McMillon and Target CEO Brian Cornell both pledged to keep prices low—even if it erodes profits—that consumers are looking for value, especially as inflation pushes up food pantry staples. And the price of household goods.

“This is our purpose,” Walmart CEO Doug McMillon said in an interview with CNBC’s “Squawk on the Street”. “We save people money and help them live a better life. These words come from [Walmart founder] Sam Walton’s mouth. He likes to fight inflation. So are we. “

Inflation is already widespread-even dollar stores have to increase prices. Dollar Tree raised its price floor to US$1.25 to offset the pressure it faces from rising freight rates. But it still believes that the slightly higher price is competitive.

“We think that the price of $1.25 is still an undeniable value because [shoppers are] Look for opportunities in the market,” Dollar Tree CEO Michael Witynski said on the earnings call this week.

Another Deloitte survey found that among 70% of people who had started holiday shopping before the end of October, 54% said they found the price was higher than last year. About one-third of consumers said that they increased their holiday budget in the September plan. Deloitte conducted a survey of 1,200 consumers between October 21 and 25.

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

“For quite a few people, this will be tough,” said Rod Sides, Deloitte’s vice chairman of retail distribution. “When gasoline prices, food prices and normal things like that continue to rise at the rate we have seen, this uncertainty indicates,’I may not need to splurge on that particular project because now I have to pay my rent , Maybe I didn’t have it before.”

Easwar said that in addition to price sensitivity, there may be some consumers who are absent from vacation because they are still anxious about the pandemic. They either lost their loved ones because of the coronavirus, or they are still nervous about contracting it.

“‘Should I go to the store or order online? Should I go to a large holiday party or shouldn’t it?’ … This will have a great impact on consumer behavior this year, because we are all striving for this balance And struggling,” he said.

Before turning to gift-giving and issuing gift cards, Code Tenderloin stated that it has been busy fighting for enough turkey to cook this week’s Thanksgiving meal.

“We just got bombed,” said Del Seymour, executive director of Code Tenderloin. “And this is a very wealthy city.”

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