December 8, 2009
BIRMINGHAM, Ala. - More U.S. consumers will consider giving cash gifts this holiday season, a trend that could further weaken the retail industry if the cash is used to pay household bills, says a marketing expert in the University of Alabama at Birmingham (UAB) School of Business
"For a number of years now we have been a gift-card-giving society, but I believe that growing use restrictions and more rapidly approaching expiration dates for the cards could drive more gift-givers to consider cash because of the flexibility it provides," says Lauren Skinner, Ph.D., an assistant professor of marketing. "Cash never expires, and it can be spent in any way, anywhere and without restrictions."
But, says Skinner, the benefits of cash gifts for consumers are potentially harmful to retailers. She points to a Dec. 1 study released by the Western Union Co. that showed 45 percent of U.S. adults surveyed plan to use cash gifts to pay for daily expenses or settle outstanding bills.
"If those daily expenses are grocery store or gas station purchases then the impacts are not as negative in retail terms, but if cash gifts are used to pay heating bills or cable company charges then that is money that is not reaching retailers," Skinner says.
"Early season indicators show consumers are being very careful this holiday season to seek out good value and limit spending," she says. "Any additional trends, like cash gifts going to household expenses, that keep money out of retailers' cash registers will further impact an industry that is struggling to pull itself out of an extended recession."
An estimated 70 percent of the U.S. economy is tied to consumer spending and the retail industry. Skinner says more money pumped into the industry in the short term could play a crucial role in further driving the country's economic recovery.
"This is an extremely important holiday retail season," Skinner says. "It is not just every dollar that counts. Every penny counts for the retail industry and the larger economy."
About the UAB School of Business
Known for its innovative and interdisciplinary approach to education at both the graduate and undergraduate levels, the University of Alabama at Birmingham (UAB) is an internationally renowned research university and academic medical center. Capitalizing on the campus' location in the heart of Alabama's largest city and business center, the UAB School of Business offers unparalleled student access to internships and part- and full-time employment opportunities with the state's most significant companies.