Jennie Rivlin Roberts hopes and expects to take in 40 percent of her yearly revenue during the holiday season at her store, ModernTribe.
To handle the business – both online and at a new storefront in downtown Atlanta – she will hire two temporary employees, doubling the staff.
“It is nerve-wracking,” said Roberts. “I am anxiously waiting for people to start walking through the doors.”
For many businesses, the tide of Christmas spending can provide a lift into profitability for the entire year.
Such is the strength of the season’s economics that it can carry even a retailer that lacks any Christmas component at all: ModernTribe sells Jewish-related items. “Even though Chanukah is not supposed to be such a huge holiday, people get swept up in the buying for friends and family,” Roberts said.
And it’s not just a retailer here and there.
The holiday season this year is expected to generate almost $1 trillion in spending — about 6 percent of the entire economy — in just a few weeks. And while some argue the boon may be overstated, holiday spending can start a virtuous cycle of spending, profits, hiring and more spending, said Richard Feinberg, professor of retail management at Purdue University.
Metro Atlantans will spend less than the national average on gifts — but more on other things, according to one survey.
The average household here will plunk down $386 on gifts, 5 percent less than a year ago, and about $200 less than the national average, Deloitte found. However, it will spend $1,365 on clothes, decorations, celebrations and other holiday-related items, up from last year and several hundred dollars more than the national trend.
When consumers spend, and for whatever reason, businesses need to staff up. Retailers become more profitable, while the people they hire get income they would not have had. Both retailers and new employees end up with money they can then recycle through their own spending.
“It’s got to start somewhere, and it always starts with the consumer dollar,” said Richard Feinberg, professor of retail management at Purdue University.
Despite a steady, if unspectacular, rise in the number of jobs, consumers are coping with “lower to flat levels of disposable income,” he said: Raises are anemic or non-existent and unemployment is still relatively high.
The average shopper has told pollsters that he or she will spend between $650 and $725 on gifts, Feinberg said.
A tailwind for spending is the price of gas, which has plummeted since early summer, potentially leaving more money in consumer coffers. Feinberg projects a 4 percent increase in consumer spending nationally this holiday season – modest, but better than last year’s lackluster 2.8 percent increase.
And more spending translates to more jobs – at least for the holidays.
Since the 1990-91 recession, Georgia retailers have added an average of 26,268 employees each holiday season, according to data provided by the Bureau of Labor Statistics. The weakest hiring of the past two decades came in 2008 when the economy was in near collapse – and even then, retailers added 7,600 positions.
While growth since has been modest, forecasters say this year should be a decent one for hiring.
“Retailers hire hundreds of thousands of people,” said Kathy Grannis, spokeswoman for the National Retail Federation. “This year, potentially as many as 800,000 new positions” will be added.
Most of those positions are eliminated after Christmas. In fact, the state’s retail sector has dropped an average of 21,500 jobs each January since 2003.
Those numbers are rarely reported: The government generally issues “seasonally adjusted” reports, data that has been smoothed to account for variations that happen predictably at certain times of the year.
However it’s reported, the impact is impressive: The holidays account roughly 30 percent of total retail spending.
Not everyone agrees on when to start counting the holiday spending, and not everyone includes the same industries as part of retail. The National Retail Federation says roughly $3.2 trillion each year is spent on retail, and that the holiday season accounts for 20 percent of industry sales, according to spokeswoman Kathy Grannis.
Some economists question such figures, though.
While the holidays represent a huge amount of spending, how much would have happened anyhow – just at a different time? That is, if there were no blitz of ads and holiday come-ons, maybe consumers would spend about the same and just spread it throughout the year.
The estimated average cost of holiday gift-buying for consumers is tiny compared to their annual income and spending.
Second, does the revenue bulge shape the fates of some businesses?
Many companies slide into the fall needing a strong holiday season, and even strong consumer spending overall doesn’t mean that any individual business will do well.
More than revenue, the question may be profit, suggested Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.
By the time the holidays roll around, most of a retailer’s annual costs – equipment, rent, labor – are paid for, he said. “Profitability can be made or broken in December.”
And there is the question of winners and losers.
Certain kinds of businesses benefit from the holiday season – mainly those whose products might look good wrapped-up and waiting under a Christmas tree.
Dhawan cautioned against exaggerating the importance of holiday spending.
For the larger economy, it doesn’t matter much what a consumer chooses to spend on. So while some retailers may bloom at the holidays, their profits may be coming at the expense of other businesses without a seasonal appeal.
“If they spend more on gifts, they are spending less on something like eating out at restaurants,” said Dhawan.
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