Posts Tagged ‘consumer spending’

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Collaborative Consumption

Tuesday, July 26th, 2011

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(image credit: Collaborative Consumption)

But isn’t that like, communism, man?

Not exactly – people still own things and are making a profit from them, and that’s sort of the point.

Technology (i.e. the internet) is allowing regular people like you and me to share their skills, stuff or space with the world – for profit. New websites and services like TaskRabbit, SkillShare and Airbnb (and even old stuff like eBay and Craigslist) allow people to take advantage of stuff they own or stuff they can do by lowering barriers-to-entry.

But, wait, if, like, everyone can easily buy and sell stuff, isn’t that at least, like, socialism, man?

Not exactly.

What’s your consumer label?

Thursday, June 23rd, 2011

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(credit: Marketplace)

Labels: not just for food anymore. Companies have to organize their customers somehow – otherwise they’d be marketing denture cream to 8-year-olds and tampons to middle-aged men. Are you a High Rise Renter? Part of Main Street USA? Live in a college dorm? There’s a label for that.

How do they do it? Well they used to just make their best guess about who was watching a given channel at a given hour (guess who was watching Oprah at 4pm every day?) and tailor their advertising appropriately. But now marketers have all sorts of information about us. From online profiles to credit card transactions to Google searches and Foursquare check-ins, everyone with some kind of connection to the outside world is pretty much leaving a trail of data every where they go.

So – surprise! – a huge industry has sprung up to collect and analyze this data (called “data mining”) and sell it to the companies that want to sell you stuff. You can read all about it here, and “identify your lifestyle category” here.

Spending, Growing, and Giving in Warm Weather

Tuesday, May 31st, 2011


(credit: mandolin davis)

Your spending habits have changed in the past month, haven’t they? If you’re in the Northern hemisphere, you’re probably entering something called “summer,” which is a sure sign that wallets are creaking open after a long winter. Why? Well, basically, the days are longer, the sun is shinier, the calendar is overflowing with vacation days, and people are just generally having more fun. Which means more ways to spend that cash!

But it’s not just summer that has us pulling out our credit cards like a bunch of capitalist lemmings – the entire world economy changes with the seasons, and your money habits are a bigger part of that than you may think.

So here’s how it usually goes:

Spring & Summer = Spend

Besides the obvious expenses, like vacations and the new clothes you need now that you’re actually leaving your house in broad daylight, the warm-weather months just seem to tap into a spendy part of our brains. At least one study suggests that consumers consume more when they’re exposed to more hours of sunlight. Because they’re happier. And happy people like to buy stuff.

Fall & Winter = Grow

More specifically, Summer = sell stock & go on vacation; Fall & Winter = buy stock & hope it performs

There’s a saying on Wall Street – “Sell in May and Go Away.” It refers to a pattern of higher stock market returns from November to April and lower returns from May to October. So if your stock has done well all winter and you’re pretty sure it’s going to dip in the spring, you want to sell while it’s still high. And if you think the price is going to skyrocket again around Thanksgiving, you’ll want to snatch it up while it’s still low. Get it? Interestingly, no one can explain this pattern. (Though plenty of people are trying.)

December = Give

December is hands-down the biggest fundraising month for charities. Not only are people swept up in the generous holiday spirit (and probably feeling a little guilty about all the money they’re spending on pie and presents), but December is the last time to make tax-deductible donations for the year. And since many people don’t give much (or at all) during the rest of the year, the last week of December is when nonprofits see most of their donations pour in.

Everyone has a different reason for giving in winter, but a common one is that donors are busy going on vacation and spending money on themselves in the spring and summer. And who knows? Maybe there’s something about the bitterness of winter that makes people think more about world suffering.

But that’s just most people.

Do you see your own money behavior in any of these trends? More importantly, do you want to make your financial decisions based on the weather? After all, charities depend on donations year-round, and we all know you can’t really time the market.

If you’ve been unconsciously following the crowd, ask yourself: is this how you want to spend (grow, and give) your summer?

Americans are Spending More (yay!)… But Not Necessarily Getting More (boo)

Saturday, April 2nd, 2011

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(photo credit:  Eggybird)

Every month for the past eight months, dutiful Americans have been pulling out their wallets and handing their money to other Americans in exchange for goods and services. In other words, they’ve been lubricating the wheels of our creaky economic machine.

Why? Well, part of it is that they’re more confident now that the recession is over and there are real signs of a recovery. But the other, more significant part is that the cost of living increased. That’s right: inflation.

Food and gas prices went up, which means that more of Joe American’s dollars went to feeding his family and driving to work than to buying a new television or a trampoline for the kids.

Ben Bernanke from the Fed says that nobody should be worrying about out-of-control inflation – food and gas prices will come down again. But if he’s wrong, it’s the Fed’s job to take action to make sure Joe still has a few dollars left to pay for his morning coffee after feeding the kids and driving to work.

And by the way… while inflation sounds like a bad thing, it’s really not as bad as its evil twin, deflation.

Have you been spending more money since last summer? Why?

This Fall, Look Forward To High, High Prices!

Friday, February 18th, 2011


(photo credit: Thing Three)

“Most” consumer goods are about to get a lot pricier - food, clothing, appliances, you name it. Why? Commodities, demand, and labor! Here’s what that actually means for you…

  • The cost of raw materials, like cotton, wheat, and metal, has increased wildly in recent years. These raw materials are traded on exchanges kind of like stocks, but they’re called commodities. Just like stocks, the prices of commodities changes frequently.
  • When commodity prices shoot up, it’s more expensive for companies to make their products, and that cost gets passed on to you, the consumer.
  • Besides the price of materials, there’s the cost of people. Workers overseas now demand higher wages than they used to, and with more money to spend, there’s an increased demand for certain goods (like cars and meat). That all adds up to more expensive products.
  • Retailers have been holding off on raising prices to keep customers during the recession, but they say they can’t hold out anymore.
  • Will rising prices lead to inflation? Stay tuned.

Facts & Figures

  • Unemployment in the U.S. is still at 9%, and wages have risen less than 2% in the past year
  • Some brands planning to raise prices include: Nine West, Anne Klein, Victoria’s Secret, Polo Ralph Lauren, Whirlpool, Kraft, Starbucks, Sara Lee, Brooks Brothers, and Hanes
  • Inflation has been low – about 1.4%, but economists expect the rate to rise to 2.5% 2011

Best Quotes

“Consumers are not exactly in the frame of mind or economic circumstances to say ‘Oh, pay whatever they ask.’ There’s going to be pushback.” – Joshua Shapiro, Chief U.S. Economist at MFR Inc.

“These companies are constantly walking a tightrope on how far do I go. Do I offset with price or other cost cuts, or do I just take it and have it eat into my profit margins?” – Jack Russo, Consumer Goods Analyst at Edward Jones

What do you think?

Do you know what goes into the price of the products you buy? Did you ever imagine that the price of popcorn at the movie theater could be connected to weather in the Midwest and a commodites trading floor in Chicago?

Shopping The Runway

Thursday, February 17th, 2011

“Fashion weeks in New York, Paris and Milan generate a tremendous amount of press and buzz for some of the world’s most expensive clothes. But many of the runway styles are actually purchased by a small group of customers, not all of them from the isle of Manhattan. And unlike celebrities and socialites, who often get designer clothes at no charge in exchange for publicity, these customers pay full price.”

What do you think?

What do you pay full price for… and when do you wait for a sale?

Cool: Study Ranks Indie Business Saturation Across the U.S.

Wednesday, February 9th, 2011

How many independently-owned businesses are there in your city?

The Indie City Index looked at all the metropolitan areas in the U.S. to come up with a rank of which areas are great places to put a strip mall full of chain stores, and which places would rather support a family business.

Read about the study and about the importance of strong local economies here.

Have you seen any “Buy Local” signs around your town? Well they’re all over the place, and it turns out they actually work. In places with “buy local” campaigns, residents spend more money at locally-owned stores.

When you spend $1 at a corporate chain, only $0.15 of that money stays in your town. But when you spend that same $1 at a local store, $0.45 stays local. That’s a pretty big difference when you consider all the financial troubles local economies are facing these days.

The thing about an economy is that every financial transaction is somehow connected to every other financial transaction. And all those financial transactions are connected to the economic, political, and social health of an entire nation, which is connected to the rest of the world.

Something worth thinking about the next time you’re itching to spend a dollar.

Americans Open Wallets Wider Than They Have In Three Years

Wednesday, February 2nd, 2011

The financial times they are a’changing. At least, that’s what these new statistics would have us believe…

  • In 2009, the American GDP (gross domestic product – a measurement of economic activity) dropped more than it had in sixty years. But like a phoenix made up of economic statistics, it rose back up in 2010.
  • We can’t know the exact cause, but the numbers say that people earned a little more, saved a little less, and spent a little more than they had in recent years.
  • Since consumer spending makes up almost three-quarters of all economic activity in the U.S., this is good news. But there are still those issues around high unemployment and a trashed housing market…

Facts & Figures

  • Consumer spending represents 70% of all economic activity in the U.S.
  • In 2010, spending rose by 3.5% – 0.7% of that was in December alone
  • The last time spending rose that high was in 2007 (pre-recession)

What do you think?

Have you been spending more lately? Do you think the economy will recover faster depending on where you spend your money (at independent stores versus chains)?

(Check out this week’s Today at TILE for a closer look at signs of life in the economy.)

Christmas In November for Tiffany

Wednesday, November 24th, 2010

Thinking about wrapping your gifts in a certain blue box this season? Whatever, Tiffany doesn’t really need your money.

  • The company has already seen profits way higher than projected, and the upcoming shopping nightmare known as Black Friday will probably boost sales even more.
  • Other luxury goods brands are looking up as well – both Coach and Hermes are reporting strong sales this quarter.
  • The National Retail Federation says this holiday season is probably going to be the best in four years. (If you’re a retailer, that is.)

Facts & Figures

  • Sales have increased by 14% over last year
  • The biggest increase in purchases is coming from big-ticket items – those that cost $500 or more
  • Sales of items under $500 have continued to decrease

Best Quote

“We continue to see bifurcated performance, with declines in sales and transactions below $500, but double-digit percentage increases in most every other higher priced category. This indicates to us diverging effects to one degree or another that the economy is having on consumer spending.” – Mark Aaron, Tiffany’s Investor Relations Chief

Starbucks Fishes For Customers With Free Stuff

Wednesday, October 20th, 2010

Would you like a free e-book with that grande caramel macchiato?

  • In an effort to boost profits, Starbucks is trying a new promotion with partner Yahoo! to bring free e-books, movies, online news subscriptions, and mp3s to customers using its free wifi.
  • The online freebies will only be accessible through Starbucks wifi networks, meaning customers will have to return to a shop to pick up where they left off with their books and movies. Alternately, they can purchase the product from the provider, which gives Starbucks a portion of the profit.
  • To make the program happen, the company has partnered with The Wall Street Journal, The New York Times, USA Today, Apple, Patch, Zagat, HarperCollins, Penguin Group, and SnagFilms.

Facts & Figures

  • Starbucks made its wifi free to everybody this July.
  • Users logged in to Starbucks wifi over 30 million times in September.

Best Quote

“Users across the Internet are moving more into this ‘snackable behavior’ to begin with.” – Burke Culligan, Vice President of Product Management at Yahoo!

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