Like any guy, Rory Sheridan, a waiter from New York City, wants to impress his girlfriend during their first Valentine's Day as a couple. But like any guy living in 2009, he's looking to shave some expenses. So while he's going to take her out to a nice dinner this Saturday night, they've also made a pact. "We told each other, 'No presents,' " says Sheridan, 26. Would he have splurged for a nice bracelet, expensive roses or chocolates if they had the same Valentine's date a year ago? Sheridan's reply is as swift as Cupid's arrow: "Absolutely." (Read a Q&A with Steve Harvey on what men really think about women.)
Lonely hearts, you're not the only ones getting no love this Valentine's Day. The economy will likely be joining you down in the dumps. According to a recent study from the National Retail Federation, consumers plan to spend, on average, $102.50 on Valentine's Day gifts this year, down from $122.98 in 2008. That's a 17% drop. Overall, the study projects that Valentine's Day spending will fall 14%, to $14.7 billion, compared with last year. "People are trading down," says George Van Horn, an industry analyst at IBIS World, a research firm that also is predicting a decline in Valentine's Day spending. "This year consumers are thinking about smaller tokens that are thoughtful and not as elaborate and expensive as in years past." (See pictures of expensive things anyway.)
Among gift categories, IBIS World projects the sharpest drops for clothing and intimate apparel (don't expect the lingerie, ladies), dining out, jewelry, romantic getaways and flowers. Only greeting cards and candy, the smaller-ticket items, are showing a slight uptick. Brand Keys Inc., a New York Citybased research and consulting firm, found that 15% of men and women said they would stay home this Valentine's Day, nearly four times as many as in 2008. Consumers also told the company they'd share gifts with fewer friends and family members. "Your great-aunt may not get something this year," says Robert Passikoff, the president of Brand Keys. "You may not give a card to your neighbor. Valentine's Day will go back to resonating with core family and significant others. If you do that, it's easy to save $20."
These days, consumers, no matter how romantic and sentimental they may be, value that extra cash. So retailers must get more aggressive in order to spread the love. At Louis Martin Jewelers in New York City, for example, you can find the back room filled with sparkling rings and necklaces. "Last year, this was the high-end room," says Martin, the owner. "Now, it's the markdown room." Everything's on sale for example, a $2,500, 18-karat-gold, diamond and amethyst ring now costs $597. "We're selling things at or even below cost," Martin says. "We have to adapt." Bradsdeals.com, an aggregator of retail deals on the Web, features a $48 bead necklace from online jeweler Blue Nile. "I've followed Blue Nile for a long time," says site founder Brad Wilson, who started bradsdeals.com eight years ago. "I hadn't been aware they had a price tier that low." (See 10 things to do in New York City.)
There's a sharp difference in the volume and steepness of this year's discounts from the ones offered last year. "It's like night and day," Wilson says. Online florist 1-800-FLOWERS.com, whose sales dropped for the first time in company history last quarter, is selling a dozen roses for $24.99. "That's the lowest price we've seen in 25 years," says company founder and CEO Jim McCann. (Read "Valentine's Deals That You'll Love.")
Price alone won't compel consumers to spend big money for Valentine's Day. Many retailers have tried creative marketing initiatives as well. "Companies are getting better and better at grabbing the customer's attention during this downturn," says Kathy Deane, the president of Tobe, a retail consultancy. For example, as part of its "We Love You" promotion, Bloomingdale's will give you a free hippie scarf if you spend $100 at one of its stores. If you spend $25 or more on a box of Godiva chocolates, you could win a trip to the company's Chocolate Decadence suite where the chairs, walls and candles are all made out of chocolate at a New York City hotel.
In London on Thursday, the third-floor lingerie aisles at department store Selfridges & Co. lured customers in a unique way. "Join Selfridges for a sexy and indulgent Valentine's evening!" said the company's website. The allure: while you shop, the "gorgeous dancers from Stringfellows" a strip joint perform, using Carmen Electra's portable home pole-dancing kit. (See 10 things to do in London.)
Of course, you may want to skip the strippers and join the thousands of customers opting for a less decadent Valentine's Day this year. Analysts predict that specialty arts-and-crafts stores should thrive as more consumers choose handmade over store-bought gifts. The website for specialty retailer Michaels details dozens of ideas for making cards, scrapbooks and jewelry. Since the holiday falls on a Saturday in 2009, couples can spend a full day at a museum or at a picnic, if the weather permits. During these stressful times, people still want to huddle with their loved ones. "We won't see people saying, 'O.K., Valentine's Day has been cancelled,' " says Van Horn. "People will still give their loved ones what they deserve." Millions will be thinking pink this Valentine's Day. But can the holiday retailers stay out of the red?