Consumers will leave retailers brokenhearted this Valentine’s Day, as IBISWorld anticipates holiday spending to contract 0.8% in 2017. The overall decline in holiday spending will stem from a drop in the number of shoppers participating in the special day; according to the National Retail Federation (NRF), only 53.9% of consumers are anticipated to make Valentine’s Day purchases this year, down from 54.8% in 2016. Furthermore, IBISWorld expects that shoppers will seek out bargains and retailers will respond with discounts and promotions, further cutting into holiday spending. Following a decade of Valentine’s Day outlay gains, IBISWorld estimates that these adverse trends will push total holiday spending down to total $19.8 billion this year.
While overall Valentine’s Day spending is anticipated to decline, demand for some gift categories will heat up. For example, holiday spending on flowers and jewelry is anticipated to increase 0.3% and 0.6% in 2017, respectively. While the Florists industry and Jewelry Stores industry will reap some benefits from increased demand, online retailers selling flowers and jewelry will capture a significant share of Valentine’s Day spending on these products. More consumers are turning to the internet for their gifting needs, due to its competitive pricing and convenient shopping format. Increased consumer interest in e-commerce this Valentine’s Day will contribute to an expected 7.0% increase in revenue for the Online Jewelry and Watch Sales industry and a 2.0% revenue jump for the Online Flower Shops industry in 2017.
Romantic getaways and other experience gifts will also exhibit an increase in demand this Valentine’s Day. According to the NRF, 40.0% of consumers wish to receive an experiential present this Valentine’s Day and IBISWorld estimates that spending on this gift category will increase 4.6% this year. This includes consumer spending on plane tickets, hotels, event tickets and spa packages. Millennials, in particular, will drive spending on this product segment; according to a study by Harris Group, 72.0% of millennials prefer to spend money on experiences over material items. This spending trend will contribute to a 2.3% revenue increase for the Hotels and Motels industry in 2017, as well as a significant 10.7% revenue jump for the Massage Services industry this year.
Despite revenue gains for the aforementioned products, consumer spending on most gift categories is expected to take a tumble this Valentine’s Day. In particular, IBISWorld anticipates love-struck shoppers to cut spending on greeting cards, candy, evenings out and apparel. Greeting cards will take the most significant shot to the heart, as demand for this product category is expected to decline 5.9% in 2017. According to the NRF, only 46.9% of consumers plan to buy their loved ones greeting cards this year, down from 47.9% in 2016. Similarly, there will be love lost for celebratory evenings this Valentine’s Day, as fewer consumers plan to splurge on a night out, causing revenue to decline 5.1% for this gift category.
Valentine’s Day spending on candy and apparel will similarly contract, as lovers spend less per purchase on these goods. This trend will be exacerbated by an increase in purchases from low-value stores; according to the NRF, 31.5% of consumers plan to buy their holiday gifts from discount stores this Valentine’s Day, up from 31.0% in 2016. Nevertheless, IBISWorld estimates that the average outlay per shopper will slightly increase from $150.33 in 2016 to $151.68 in 2017.