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What If Consumers Stopped Shopping?

Americans love to shop.  In 2015, total retail spending was estimated at $5.3 trillion.  For all the hype about online shopping, the U.S. Census Bureau estimates that ecommerce accounted for only 7.5 of all retail purchases – over 90 percent of purchases still take place at the local retailer, especially involving big-ticket items like cars.  Even more revealing, estimates suggest that between 70 and 80 percent of purchase decisions are made in-store, often at the point-of-purchase.

The Christmas shopping season is now underway.  The recent cold spurt that rippled through much of the country signaled the coming of Fall and reminds consumers that Santa is on his way — and that its time to get the credit card ready.

The National Retail Federation (NRF) is bullish on forthcoming holiday season spending.  It reports 2015 holiday-season spending topped $800 per person for the second year in a row.  It noted that “more than half of shoppers splurging on non-gift items for themselves.”

The holiday buying frenzy gives a real jolt to the nation’s economy.  The NRF projects that during the two months preceding Christmas, November and December, spending will increase over 2015 totals by nearly 4 percent (3.6%) to $655.8 billion.  It sees strong online sales increasing its relative market share to 10 percent from 7 percent over last year’s sales, accounting for upwards $117 billion in sales.

Perhaps more important, the NRF projects this year retailers are likely to hire between 640,000 and 690,000 seasonal workers, in line with last year’s 675,300 holiday positions.

But what would happen not only to Christmas cheer but the U.S. economy if Americans stopped shopping during the holiday season?

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Many New Yorkers and listeners to Pacifica’s WBAI may have heard the sermons of Reverend Billy and the Stop Shopping Choir, a radical performance group.  It bills itself as a “wild anti-consumerist gospel shouters and Earth loving urban activists who have worked with communities on four continents defending community, life and imagination.”  It adds, “Our Devils over the 15 years of our ‘church’ have remained the same: Consumerism and Militarism.”

But what if the effort to stop shopping came less from well-intentioned theatrical performances than from more systemic economic and social factors?  What if the tepid recovery from the 2007-’09 Great Recession was increasing the number of those who can’t afford the costs associated with Christmas spending and/or if personal debt was simply too high to take on the heavy charges associated with holiday good cheer?

A number of sources peg holiday spending at over $800 per adult covering gifts, hosting parties, family emergencies and, for some, fewer working hours.  In 2015, Gallup projected average holiday spending intentions at $830, up from the $720 from 2014.  It also reported that holiday spending hit an all-time high of $866 in 2007 only to crash by 30 percent to $616 in 2008.

One of the consequences of the 2008 recession was that there was a significant shrinkage in what has historically been considered middle-income jobs (i.e., jobs that paid $14 to $21 per hour).  This has been matched by an increase in the lower-wage sector (i.e., jobs that pay under $14).  According to one report, median household income has declined about 7 percent since 2000.

This situation is compounded by an increase in the very poor.  A recent study by the America’s Research Group, a firm run by C. Britt Beemer, formerly with the Heritage Foundation, estimates that approximately 20 percent Americans remain “too poor to shop.”  It estimates “that about 26 million [adult] Americans work on average two or three jobs at a time which, when added together, nets just shy of $30,000 in annual income.  All while supporting anywhere from two to four children.”

Compounding this situation, Americans are drowning in debt and often use additional debt to finance their holiday purchases.  The average U.S. household with debt carries $15,675 in credit card debt and $132,158 in total debt.  A 2014 survey by CreditDonkey found that more than one-third of consumers (37%) said they used credit cards to finance their Santa spending.

***

Retail sales play a critical role in the U.S. economy.  A recent Pricewaterhouse-Coopers study finds that retail businesses, directly and indirectly, contribute about two-thirds or $2.6 trillion annually to the nation’s gross domestic product (GDP).  In addition, they generate 42 million jobs that provide $1.6 trillion in worker income.

Christmas is the peak selling season for most retailers as consumers purchase gifts, decorations and supplies as well as host parties and festive get-togethers to celebrate the holiday.  While the “official” holiday period starts on “Black Friday,” the day after Thanksgiving, for many retailers the “Christmas shopping season” is now underway.  (The term “black” refers to a company’s balance sheet going into profit.)

Not surprising, many Americans don’t like to shop during the holiday season.  A 2013 Pew Research study found that half of those surveyed didn’t like to shop during Christmas spending blitz.  It reports: a third of Americans (33%) say they dislike the commercialism or materialism of the holidays; roughly one-in-five (22%) cite the high expenses of the season or the expectation of buying gifts; and one-in-ten (10%) mention shopping or crowded stores.

The stagnant post-recession recovery has had a significant impact on retail sales.  According to one estimate, overall retail sales (excluding automobiles) has slowed down since 2012 and, in 2015, hit close to rock bottom with growth approaching zero percent.  The slowdown has hit up-market and down-market stores equally.  Up-market retailers like Nordstrom and Macy’s have seen their stocks pummeled; stocks for chains like Wal-Mart and Target are flat.  This has led major retailers to plan to close some 6,000 stores across the country.

So, picture a bleak Christmas when shoppers stop shopping because they simply can’t afford to purchase all the stuff thrown at them by desperate retailers.  In all likelihood it won’t be this holiday season.  But at sometime in the not-too-distant future a significant number of Americans will no longer be able to afford all the well-intentioned gifts, false glitter and hollow cheer that marks the season.  That future might not be that far away.

 

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David Rosen is the author of Sex, Sin & Subversion:  The Transformation of 1950s New York’s Forbidden into America’s New Normal (Skyhorse, 2015).  He can be reached at drosennyc@verizon.net; check out www.DavidRosenWrites.com.

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