The future of the economy may be uncertain, but money woes appear not to have dampened the spirits of holiday shoppers. Spending over the four-day weekend following Thanksgiving, including Black Friday and Cyber Monday, reached $59 billion, a 13 percent increase over last year, according to the National Retail Federation. The organization predicts that holiday sales will jump 4 percent over last year’s number, to $586 billion.
At the same time, a November survey by myFICO, a consumer division of FICO, the company specializing in credit risk scores, found that while half of all shoppers still plan to use their credit cards for all holiday shopping, nearly one-third say they will spend less and use their plastic less often.
What does it all mean? Why do people spend more when they may have less? How can shoppers get the biggest bang for their buck? BU Today spoke with Barbara Bickart, a School of Management associate professor of marketing and a Dean’s Research Fellow, about common holiday shopping pitfalls, why we spend irrationally this time of year, whether we should feel guilty about buying for ourselves, and why we should buy the same gift for everyone on our holiday list.
BU Today: What are some common mistakes shoppers make during the holidays?
Bickart: The real issue is being tempted by deals that are right in front of you that seem too good to resist and look like they’re going to go away tomorrow. The retailers do a really good job of trying to convey that this is a limited time offer, that it’s a very precious, valuable, scarce deal, and that there are only so many of these available. So people think, I’ve got to act now.
How can we avoid these pitfalls?
One thing is having a list and knowing exactly what you’re going to get. And if you’re going to get things for yourself, know what those are too, because you’re probably going to be more impulsive for yourself than you are for others.
Another thing is not to go shopping when you’re tired or depleted, because as we make many decisions, we start to become more depleted and then we become more inclined to be impulsive. If you go shopping at a time when it’s not so busy or when you can be energetic, that’s going to help you avoid making those impulsive decisions. A shopping marathon is not a good idea. Do a little bit at a time and maybe do it on a Tuesday night when the stores aren’t so crowded.
Hyped deal days like Black Friday and Cyber Monday spur a holiday shopping frenzy at malls and online. What are some tricks marketers use to keep up that fervor?
You see the deals continuing. Marketers try and make every Monday a Cyber Monday. There’s this idea that as you get closer to the holidays, there are going to be even better deals out there.
People often agonize over finding the right gift for friends or family. Do they get a good return on their investment, so to speak?
There’s research that shows people try to be very thoughtful when giving a gift and give everybody something different and really designed for them. It turns out that people just want something good. Often your idea of getting each person something different doesn’t result in the greatest amount of satisfaction from the receiver. So one strategy is to get everybody the same thing, or something you would like, or that might be common across everybody. It may not look as good as you’re giving the gift, but it’s going to save you energy and the receiver is probably going to be happier.
Even though unemployment is still high and the economy has been slow to rebound, experts predict a higher sales year than in 2011. How do you explain that?
Holiday shopping is a ritual, and rituals are really important in helping establish our sense of identity and maintaining continuity and connection to our culture. And maybe this is the one time of year you can treat yourself and give to other people. Probably the driving force is that this is what we do every time this year, and even if other aspects of our life don’t seem so good, this is one thing that we feel, correctly or incorrectly, picks us up.
The National Retail Federation reports that 59 percent of shoppers buy for themselves, which would have seemed wrong not so long ago. What’s changed culturally?
People have learned that this is a good time to buy, and they know that they’re going to get a good deal or they think that they’re going to get a good deal. So some people actually plan purchases for themselves, if they’re big-ticket items like a TV. They know this is probably the best time to get that TV because they’re going to get a good deal if they buy now, so why not?
There could be differences across age cohorts and that younger people are more likely to buy for themselves than older people. Whether that’s due to younger people needing more stuff or if there’s some real cultural difference between younger and older people, I don’t know.
Do you have any pointers on how to avoid debt this season?
We spend less when we pay cash. You can also set up your accounts and say, I’m going to spend X amount on holiday gifts. You’re more likely to stick to that budget and not overspend. A list is really important. And set a budget for how much you’re going to spend for each person.