Target aiming at frugal shoppers this holiday seasonby Martin Moylan, Minnesota Public Radio
St. Paul, Minn. — With many consumers afraid to spend, the holiday shopping season is expected to be more so-so than ho-ho for retailers. And when they do open their wallets, shoppers are determined to be frugal.
That has the attention of Minneapolis-based Target, which is addressing such reluctance head-on in holiday television ads. In one, a husband and wife spar over the wisdom of "Santa" giving the family a big-screen flat panel TV.
"Wow!" the wife exclaims. "Thanks Santa."
"I thought we weren't going to spend too much," her husband grumbles.
"But these gifts are from Santa!" his wife explains with relish.
The husband -- perhaps envisioning a hefty credit card bill on the way-- suggests Santa forgot about the recession.
"Maybe Santa was a little thriftier than you think," his wife retorts. "Maybe Santa doesn't need any help doing Santa's job."
The ad, which ends with a reassuring note about "great electronics" at "surprisingly great prices," addresses a topic of serious discussion in a lot of households -- How much to spend on holiday gifts during an economic downturn.
An October National Retail Federation survey found 84 percent of Americans expected to spend less on Christmas this year than they did a year ago. Target is trying to turn that fixation on frugality to its advantage, though, while often poking fun at it.
Retail consultant Howard Davidowitz said it makes sense for Target to directly address consumers' ongoing worries about the economy.
"The consumer has never been in worse condition, given unemployment, the pullback in credit availability, food stamps at a record level, consumer bankruptcies at record levels," Davidowitz said. "The consumer simply doesn't have money, and they're trading down dramatically. And I think Target is trying to position themselves correctly."
Many retailers, including mighty Wal-Mart, are touting low prices for holiday gifts. But Davidowitz said Target isn't trying to convince consumers it is selling cheap stuff.
"It's not just price," he said. "It's quality at a price. That's the message."
In another of the retailer's TV ads, a guy gives his girlfriend a necklace that makes her wonder just how serious their relationship is.
"This is a really nice gift," the girl exclaims as she gushes over a necklace. "It's just I didn't know that we were 'there' yet."
What makes Target's Christmas ads unusual is that the actors speak. That helps the ads connect with consumers, Target spokeswoman Sarah Boehle said.
"It really shows that we understand what families are dealing with and what mothers are going through and shows them there is a way to make every goal of the season achievable," she said.
The ads could be pushing some other buttons, too.
"I suspect the goal is to take advantage of what I've been calling frugality fatigue" said Akshay Rao, director of the Institute for Research in Marketing at the University of Minnesota.
Some people are tiring of not spending, Rao said. They see reassuring signs like a rebounding stock market, security in their own jobs and think maybe it'd be OK to spend more freely.
"As a retailer, I need to take advantage of this somewhat mixed emotion that consumers are facing," Rao said. "The advertising is designed to take advantage of the combination of frugality fatigue and the season, which is an excuse to actually go out and spend money. But spend it wisely."
Last week's report on consumer spending suggested Americans are feeling more comfortable about opening their wallets. For the most part, retailers had been reporting lackluster results for the holiday shopping season.
Nationwide, retail sales in November rose 1.2 percent, compared with November of last year. And that figure excludes cars. Target's November sales rose 1.5 percent, including sales from stores open less than a year.
- Morning Edition, 12/15/2009, 6:20 a.m.