Will Cupid help?

If the US National Retail Federation's 2009 Valentine's Day Consumer Intentions and Actions survey is to be believed 'there's one thing that love may not conquer this year: the economy.' Conducted by BIGresearch, a consumer market intelligence firm, the survey found that consumers plan to spend an average $102.50 on Valentine's gifts and merchandise, down from last year's $122.98 per person. However, total Valentine's Day spending is expected to reach $14.7 billion. "A bad economy won't stop Cupid this Valentine's Day, but it might slow him down," said NRF President and CEO Tracy Mullin.

The India story

The picture is not very different closer home in India. "Traditionally, the market has three grades. The first comprising of flowers and cards which will remain largely unaffected; the second of regular accessories like clothes, perfumes; the third of premium goods such as mobile phones, iPods, watches...The third category is expected to be hurt by 20%," says Purnendu Kumar, Associate VP, Technopak. The prime reason for the "Rs 1,200 crore Valentine market to feel the heat is the low marketing spend this year. That is what creates the environment and after all it is a concept driven by marketing."

While most prefer to characterise the Indian economy "in a slowdown mode" and not "hit by recession", the mood is hardly upbeat and people are definitely planning to spend lesser this season. "I will just say it with flowers this time. I have a job today, but I am uncertain if I will be lucky enough to have it tomorrow as well. I'd rather hold on to my savings," says 26-year old Kunal Vij, a HDFC employee. The hint of anxiety in his voice is unmistakable. Last year was particularly special for Vij he had just got a promotion and he didn't think twice before booking a 3D-4N Valentine package in Goa! Most can't help but feel the pinch. Well, not everyone is in a position to do what UK-based businessman and Shilpa Shetty's boyfriend Raj Kundra did forking out Rs 75 crore to gift his love a 11.7% stake in Rajasthan Royals! Most would settle for small tokens of affection.

Showdown? Where?

The brands however don't seem ready to acknowledge the pessimism in the air. "Valentine's Day is the most important event in the yearly calendar for us. Every year the response is tremendous. We have witnessed an increase in sales every year. General trends show that our sales double up during the Valentine's week and more than quadruple during the last four days before the event. Overall, the occasion contributes to approximately 12-15% of our total sales. At this point, all our stores have placed a re-order of the cards, so we can say that the situation is positive this year despite the recession," says Youhan Darrab Aria, Head, Corporate Communications Archies Limited.

Top end brands are equally optimitic. Says Sukanya Dutta Roy, Country Manager CGB, Swarovski India, "Last year, between mid January to February end, Swarovski saw 12 % of the total sales for the year. This period is the most popular season after Diwali, not just because of the Valentine's but also because of the wedding season. Therefore, despite the economic slow-down, we foresee good sales across India." However Sandeep Kulhali, VP, Tanishq says "we will be happy with whatever we get." The jewellery brand is aiming for central level tie ups and contests. Luxury mall DLF Emporio is doing a special Valentine Week from February10-14. "All our stores will be participating in the festival by giving special vouchers to customers through a lucky draw," says Roasie Ahluwalia, spokesperson, Genesis Luxury.

Virtual world

The brands realise that the key to this Valentine lies in offering small tokens of affection rather than extravagant gift options. Consider eBay. Their theme for 2009 is 'Valentine on a budget.' "The campaign is based on a consumer insight that in today's economic environment the savvy online shopper is seeking 'more for less'. Within his or her fixed budget, they would like to get more products," says Deepa Thomas, Senior Manager, Corporate Communications and Pop Culture, eBay India. The offer enables consumers to get assured gifts on all purchases. "We have witnessed a double digit increase in daily unique visitors, many of whom make their first online purchase during festive seasons like Valentine's." she further adds.

With 86.3 million active users worldwide, the online market doesn't seem to have much to worry about. The average sales of goods on the site every second is $2,000 and despite the recession the last quarter of 2008 saw their gross merchandise volume (GMV) pegged at $13.6 billion. "A piece of diamond jewellery sells every six minutes on eBay India," says Thomas. Online retailer Rediff has registered "a 30% growth for the season, over last year and expects the sales to peak in the last four days," says Kashyap Mehta, Associate Vice President, Subscription and Ecommerce, Rediff.com India. "This year we have seen an increase in lingerie and sleepwear sales and we expect a 40- 50% growth over last year."

Tradition rules

Most brands are expecting Cupid to strike this Valentine as well. Cadbury has not revised its targets either. Patchi believes people will spend irrespective of the economic slowdown and expects the sales this season to shoot up by Rs 20 lakh. "Indian economy is not going through a recession. We are just going through a slowdown. The sales here have grown every year by 30-35%. And I hope this year too we reach our targets as planned," says Harsh Gokal, Patchi India Business Head.

Traditional romantic gifts like flowers, chocolates as well as diamond jewellery continue to top the charts as the favourite Valentine gifts. Ferns N Petals isn't worried. "The sale of flowers increases by 1000% during the Valentine month as compared to the normal sale during the year. If on a normal day we do two lakh of business then it goes up to 25 lakh on Valentine's Day," says Pawan Gadia, VP, Ferns N Petals. He points to an interesting trend people have begun to prefer exotic flowers like oriental lilies, anthuriums and cembediums over the customary favourite red roses.

While flowers and chocolates would not really dent the pocket, eating out just might. A cause enough for the hospitality industry to think about? Not really, Himani Modi, Director, Barcode Lounge Bar, maintains. "The economic slow-down did affect the collections we were drawing from corporate parties. So, we introduced new packages and that has helped a great deal in boosting our sales. We are expecting 20% growth in terms of footfalls and we have made 250 advance bookings," adds Modi. Ruchika Mehta, Marketing Communications Manager, Shangri-La Hotel, Delhi, stresses that the hotel has been getting queries regularly and "people do want to celebrate". The scale of activities for the hotel will be the same as last year, she says. For the sake of the economy, if not love, let the sentiment prevail.

HIGH ON LOVE, LOW ON CASH

According to a survey conducted by Harris Interactive on behalf of Blue Nile, an overwhelming majority (89%) of US adults aged 18+ still plan to celebrate Valentine's Day, and more than half (62%) still plan to purchase gifts. Keeping tight control of their budgets is top of mind for most consumers, with only 12% of those surveyed planning to spend more than last year, and half of those surveyed planning to spend the same or less. Jewellery remains one of the most popular gifts. Over one-quarter (28%) of men say it is the gift they would most like to give, while 22% of women describe it as the gift they would most like to receive (only a dinner out was higher)

Business of love

and#149; 35.7% of people will buy flowers, nearly the same as last year's 35.9%

and#149; 16% will buy jewellery, compared to 16.6% in 2008

and#149; 58% will send greeting cards vs 56.8% in 2008

and#149; 47% will go for purchase clothing

l 10.2% will buy a gift card/gift certificate

Who gets what?

and#149; 90.8% will spend the most on their spouse ($67.22)

and#149; 1.5th of the budget will be spent on other family members such as children ($20.95)

and#149; Consumers will also spend on friends ($4.74), children's classmates/teachers ($3.59), co-workers ($1.94) and pets ($2.17)

and#149; The 35-44 age group will spend the most this year with the average person planning to shell out $119.19. Young adults 18-24 will be the second biggest spenders at an average of $113.68 per person, followed by 45-54 year olds ($108.82), 25-34 year olds ($105.59), and 55-64 year olds ($83.76).