Back in 1894, when Labor Day was a new idea, this federal holiday centered on parades to salute “the strength and esprit de corps of the trade and labor organizations” of the country, according to the Department of Labor.
But times have changed. The 35% of Americans who belonged to unions in 1950—the height of their power—has since fallen to about 10%. These days, the first Monday in September is more about going to a barbecue, spreading a towel at the beach or hitting retailers to take advantage of Labor Day sales. This year, though, it’s not so much about that last bit.
While frantic retailers and consumer goods makers have upped the number of ads they’ve created for the holiday—understandably reaching out to customers in recessionary times—nearly half of would-be shoppers report they’ll be spending less this year.
This is the bottom line result of a survey just released by market research firm Numerator, which polled some 2,000 consumers who had spent money during Labor Day last year and asked them what their 2020 spending plans are. Mostly, there were no future spending plans at all.
Sixty-two percent of respondents said they plan to celebrate the holiday “differently” this year. A chilling 34% of respondents said they would make no purchases at all this Labor Day. Close to half (49%) said they expected to spend less than they did in 2019. The reasons given were along the lines of what you’d expect. While 29% indicated they were simply avoiding going to stores, presumably over concerns about maintaining social distance, most of the retraction owed itself to household finances.
Thirty-nine percent of consumers said they were reining in their budgets due to a “change in job situation” (21%) and having already drained their savings accounts for pandemic-related reasons (another 21%).
This austerity wouldn’t be good news for retail brands at any time, but it’s especially discouraging now since many companies have dipped into their depleted coffers to pay for advertising. Ads containing Labor Day messaging are up by a third (33%) over last year. And while sectors like auto and retail have eased back on their ad spending, others have stacked more chips on the felt. Furniture companies, for example, make up close to 40% of Labor Day ads this year, up nearly 35% from last year. Bedding and bath advertising was also up, as were ads for tourism.
Increased activity from these latter two sectors is especially notable since neither has historically been a big Labor Day advertiser. Numerator analysts speculated that household brands are advertising more because consumers stuck in their living rooms have been spending more money on home improvement. And recent figures bear this out. In the second quarter, Home Depot’s volumes were up by 12%, with the average spent per transaction rose by 10%. Lowe’s did even better, posting a Q2 same-store sales increase of over 34%, which it attributed to consumers buying tools, paint and barbecue grills.
As for travel, while air travel might still be down by 80% on average, shorter trips made closer to home mean that some businesses, including car rentals, are pinning hopes on Americans spending a few bucks. A recent survey conducted for Cooper Tires by OnePoll found that 44% of Americans took more road trips this summer. Over a third of respondents to the Cooper poll reported that they’d visited more than two states, and on average, respondents have already gone on two trips and plan to take two more. For businesses in the travel industry that don’t happen to be airlines, such figures constitute encouraging news.