Friday, November 11, 2011

The Cheesecake Barometer

Blink:
Black Friday is two weeks away, a day that retailers will be monitoring closely to measure holiday sales during our tentative economy. Will consumers continue to be frugal, cut back and buckle down this holiday season? Not according to the Cheesecake Barometer.

Read On:
Leading consumer psychologists and marketing academics indicate that shoppers eventually get tired of exhibiting self-control all the time despite less discretionary income. Eventually they break down and indulge, but will pare back on household staples. Recent retail sales validate their hypothesis. The items that are selling are not high priced, but are considered fun, like cosmetics, premixed cocktails and coolers, wine, handbags, etc., Products associated with household chores are on a downward trend – fertilizer, weed killers, bleach, car wax, shoe polish to name a few.

Thomson Reuters reported that sales for U.S. chain stores rose 3.4% in October compared to October 2010 for the 22 retailers they track. These sales were less than what Wall Street analysts were projecting (4.5%) and the 5.1% recorded in September. However one area of indulgence that exhibited strong retail sales is what I title the “accessorize/makeover category.” Consumers, especially female consumers, might not be able to go out and buy a new outfit, but they can enhance their existing wardrobe by buying a new, expensive handbag or a pair of shoes. Then there are cosmetic accessories which jumped 22 percent in the last year according to the Chicago market research company, the Symphony IRI Group. They also reported that sales of body scrubbers increased 21 percent and nail polish 10 percent. Estée Lauder recently announced that their North America division recorded its strongest business results in a decade. Their major competitor L’Oréal reported their first half profits for 2011 were up 12 percent.

So by now you are probably wondering what the Cheesecake Barometer is. Earlier I stated that consumer physiologists are telling us we cannot be good all the time. We need to treat ourselves and satisfy our urges. What could be better than a slice of cheesecake? Approximately 700 plus calories for a basic slice; 1,326 calories if you visit your local Cheesecake Factory and order a slice of their Adam’s Peanut Butter Cup Fudge Ripple cheesecake. Yes, Symphony IRI also reported that in the past year sales of cheesecakes have risen 22 percent. Thanks to the Cheesecake Barometer, it appears we are going to experience strong holiday sales.

Will you be treating yourself to a slice of cheesecake on Black Friday?

7 comments:

  1. Jimmy, thanks for an informative, optimistic and fun read as the holiday season quickly ramps up. All of a sudden I feel the need for a wedge of pumpkin pie and a new lipstick.

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  2. Wow! As a woman I would agree to all of this 100%. Through all this "bad news" we listen to day in and day out, once in a while you have to splurge just for your sanity alone. It gives you that shot in the arm to get up every morning and do it all again.

    I would love to have cheesecake on Black Friday!

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  3. The consumer's weariness with frugality has been widely chronicled. However, the flaw in the Cheesecake barometer in our current recession, is that not only are wages down (except for the 1%), but the concurrent housing and real estate crisis has severely depressed net worth for the average American (uh...except for the 1%). In my opinion, small luxuries such as cheesecake or gourmet hamburgers may rise, but overall spending will not significantly rise (tho in comparison with the last two years, it may increase marginally). We shall see...I prefer cherry pie over cheesecake. I wonder if there is a correlative study on that...

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  4. I agree with Thomas that while a general sense of frugality might be waning a bit, we have to take note of how it's small-purchase 'luxury' items that are rising, items which are easy to rationalize the buying of despite the continued need for belt-tightening.

    After all, I doubt anyone is going to think that an increase in cosmetics purchases is going to push the overall economy back into the black. If anything, what's encouraging to see is that people are recognizing that, while times are tough, it's still important to find a way to treat ourselves, regardless of the size of purchase.

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  5. In all honesty, I'll probably have two slices.

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  6. Makes perfect sense to me: Life is uncertain... always eat dessert first... but make sure you look good while you do it.

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  7. Your blog is interesting as I was walking down Park Avenue in Winter Park Florida and noticed the busiest stores were the Chocolate and gourmet ice cream shops. I would slip those right in there with Cheesecake!

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