Alexa… Call Mom

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Alexa… Call Mom

Mother’s Day this weekend will give us our first real glimpse into how COVID-19 is changing American spending and gifting patterns. To see how consumers are adjusting their spending priorities due to the virus, let’s start by reviewing the latest Mother’s Day survey from the National Retail Federation. The NRF surveyed +8k US adult consumers at the beginning of April, or after stay-at-home orders were mandated by states. Here are our 5 major takeaways from the data:

#1: More than 8 in 10 consumers plan on celebrating Mother’s Day this year, up from 84% last year and matching the all-time high of 86% in 2018, 2013 and 2012. Seventy-eight percent said it was important to them this year “given the current state of the coronavirus.”

#2: US consumers plan on spending $205 on Mother’s Day gifts and celebrations, an all-time high and about $8 more than 2019. Total expected spending is $26.7 billion, a record back to 2009. The report notes: “Some consumers are looking to make up for the fact they can’t take mom out by sending her something a little extra special this year.”

Over three-fourths (77%) of those planning to spend less on the holiday this year blame the virus’ impact. The report says these types of consumers are turning to alternative ways to celebrate moms, such as a spa day at home, doing a puzzle together or planning a family video.

#3: Americans plan to spend the most on jewelry ($5.3 billion, up 2% y/y). As compared to last year, they also plan to increase their spending on electronics ($2.9 billion, up 34% y/y), gift cards ($2.9 billion, +10% y/y), clothing/accessories ($2.6 billion, +12% y/y), housewares and gardening tools ($1.5 billion, +35% y/y), greeting cards ($1 billion, +19%), and books/CDs ($710 million, +31% y/y).

The top three gifting categories that grew in popularity in terms of purchase intention includes electronics (+24% y/y), books (+22% y/y) and housewares/gardening tools (+21% y/y).

#4: Less than half of respondents (46%) plan on celebrating with a special outing compared to 54%-56% each year going back to 2009. Two-thirds (66%) said they are likely to celebrate Mother’s Day virtually in 2020.

#5: Younger consumers (under age 25) are planning on spending $39 more than last year. That may be because “they are more likely than the average consumer to say they are planning to gift electronics this year, which are often higher-value items. That includes things like Alexa, Google home devices or Facebook Portals that make it easier to connect with mom.”

“Those aged 35-44 who are most likely to be celebrating a spouse this Mother’s Day are also planning to spend significantly more: Many parents are shouldering new burdens when it comes to childcare right now and their partners recognize they need some extra appreciation this year.”

Our take: it is hard to know how much of the NRF’s survey findings will actually come to fruition this Sunday given the data is now 5 weeks old and so much has changed in many people’s lives. Still, the responses show two things quite clearly. First, the desire to spend on Mother’s Day gifts is high; that’s a positive sign for the economy since uncertainty can often cause consumers to crawl into their shells.  Second, what consumers can’t spend on experiences (taking mom to brunch) they will reallocate to other gifts. There is no net economic demand destruction, just a change in where the money gets spent. 

Shifting now to Google Trends data through today, which supports that optimistic take:

#1: Searches for “Mother’s Day” are on track to reach a new high this month versus any other year since the series started in 2004. Interest in the holiday spans across the US, with most searches coming from Texas, Florida, Nevada, Arizona and New Mexico. 

#2: Searches for “flowers” typically spike around Valentine’s Day and Mother’s Day each year, and partial data for May shows interest is set to break out to a new high this month as compared to the last 5 years.

#3: Searches for “jewelry” tend to rise around the Thanksgiving/Christmas holiday season, Valentine’s Day and Mother’s Day. Despite interest taking a big hit from the COVID-19 outbreak, searches so far in May match levels reached last year. Demand is also not just concentrated in the most affluent states, as those with the most interest include New York, Louisiana, Mississippi, Hawaii and New Mexico. 

Bottom line: this Mother’s Day will serve as an important case study on shifting spending patterns due to the COVID Crisis. There’s no telling how Holiday 2020 will look given the uncertainties around how the virus develops later this year. This weekend may well be a preview, however. Long on physical gifts over experience, with online shopping and tech hardware taking center stage.