Easter Retail Spending Likely to Decline

Consumers are planning to spend a little less this year on the holiday than they did last year and companies that offer holiday staples and affordable indulgences (like chocolate or jelly beans) look to be the big winners.

Apr 18, 2014 at 10:20AM

Easter may not be Christmas but it's still a huge holiday for retailers that kicks off the spring buying season. This year's projected spending looks to be down a bit reflecting a cautious public still not quite convinced that the recession has passed.

In 2014 the average American celebrating the holiday will spend $137.46 on apparel, food, candy, gifts, and more, slightly less than the $145.13 spent last year. Total spending is expected to reach $15.9 billion, according to the National Retail Federations's Easter Spending Survey, conducted by Prosper Insights & Analytics. 

And Easter is not just good for the companies that benefit from the "Easter Bunny's" shopping list (as delivered and purchased by parents perpetuating the "bunny that brings candy to kids" story), like chocolate companies Hershey (NYSE:HSY), Nestle (NASDAQOTH:NSRGF), and Mondelez International's (NASDAQ:MDLZ) Cadbury. It's also huge for supermarkets and retailers including Target (NYSE:TGT) and Wal-Mart (NYSE:WMT). And while 2014's numbers look to be down, the holiday will still be a seasonal shot in the arm to a number of industries.

"The winter doldrums left consumers with a lot of pent-up demand, and though many Americans may take a cautious approach to spending on Easter items this year, retailers are anticipating that warmer weather will easily put consumers in the mood to buy bright clothes, holiday decorations, and more," said NRF President and CEO Matthew Shay. "As one of the biggest holidays of the year, retailers are looking forward to increased customer traffic in stores and online, and will roll out promotions on everything from garden supplies and patio sets to apparel and grocery items."

To put how important Easter is as a retail holiday into perspective, NRF forecast total spending on Halloween would reach $6.9 billion in 2013 while Valentine's Day was predicted to bring in $17.3 billion for retailers. That puts Easter's $15.9 billion near the top of the heap: ahead of Father's Day ($12.7 billion when NRF last released a forecast in 2012), St. Patrick's Day ($4.7 billion in 2013), and Super Bowl Sunday ($12.3 billion in 2013), and behind only Valentine's Day, Mother's Day ($20.7 billion in 2013), and the Thanksgiving through Christmas season, which NRF tracks jointly ($602 billion in 2013). 

It all starts with Easter dinner

Fewer Americans will be celebrating the holiday this year (80.3% vs 83% last year) but 85.7% of those who do will spend a portion of their Easter budget on a family dinner or Sunday brunch out, according to NRF, which said those celebrating will spend an average of $43.18 on a holiday meal. The total spent on food will surpass $5 billion.

That spending looks to be especially good for Target and Wal-Mart as a survey conducted by BIGInsight before Easter of 2013 showed that customers of those two chains were highly likely to buy food for Easter dinner there.

According to the survey 87.3% of the Target shoppers plan to purchase their Easter meal items at the store while 87.9% of Wal-Mart shoppers reported the same.

That might sound obvious -- Wal-Mart shoppers like to shop at Wal-Mart and Target shoppers like to shop at Target (which is why they are identified as such in the first place) -- but a holiday like Easter brings increased competition. Whether it's a specialty eatery like Boston Market (which offers an Easter-specific menu), local butcher shops, or high-end grocers it's notable that Target and Wal-Mart shoppers stay loyal during the holiday season.

Easter is also good for other market segments

In addition to being one of the holiest days of the year on the Christian calendar, Easter also marks the ceremonial start to spring. Because of that NRF found that 42.9% of shoppers will purchase new spring attire such as Easter dress clothes for their children, spending an average of $22.71 with total spending on apparel expected to reach $2.6 billion. Additionally, nine in 10 (89.3%) of those celebrating will stock up on Easter candy, spending a total of $2.2 billion on everything from chocolate to Peeps -- the marshmallow bunnies and rabbits traditionally associated with the holiday. Families will also spend money on gifts ($2.4 billion), flowers ($1.1 billion), and decorations ($1.1 billion). 

"Americans are eager to dip their toes in the fresh green grass this Easter and celebrate the day with friends and family," said Prosper Insights and Analytics Director Pam Goodfellow. "Though they are planning to trim their budgets in terms of spending on food, clothes, and gifts, most will look for personal and fun items that won't break the bank in order to enjoy the day."

Smart spending on practical items and affordable indulgence seem to be the hallmarks of how Americans are celebrating Easter in this cautious economic climate. That should bring more good news for discount retailers, candy companies, and other affordable options. It also suggests that higher-end eateries and luxury purveyors won't get as large a slice of the Easter pie.

A day for family

Many retail stores are closed on Easter though many Wal-Marts remain open while most Targets are closed. Some supermarket chains open in the morning for last-minute needs, but that varies by region. Easter is generally the forgotten holiday for retailers as customers don't associate it with spending the way they do Christmas, Halloween, Valentine's Day, and Mother's and Father's Day, but as the NRF numbers show it's a huge holiday for stores.

This year, with the public still wary about the economic recovery and many folks still struggling the big winners look to be discounters and companies that offer holiday staples and affordable indulgences. This is not the year the Easter Bunny will be hopping along with new jewelry or a luxury car, but it should bring plenty of candy, flowers, clothes, and minor gifts. 

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Daniel Kline has no position in any stocks mentioned. He will likely attend Easter dinner at his in-laws though he is Jewish. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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