You might find yourself watching your favorite romantic comedies or reading the cheesiest but most adorable romance books year-round, but it is thanks to a holiday like Valentine’s Day that we can set the stage for the mystique that comes with this sort of media we consume. It is a day to celebrate love and friendship regardless of how we choose to spend it. Some might throw a big celebration or go on a dinner date. Others might rather stay home and watch a classic feel-good romance like 10 Things I Hate About You, a bitter-sweet but impeccable musical like La La Land, or a tragic emotional roller coaster like Titanic.
According to the National Retail Federation (NRF), in 2022, consumers estimated spending will finish close to $23.9 billion on Valentine’s Day-related gifts, including candy (56 percent), greeting cards (40 percent) flowers (37 percent), and jewelry (22 percent). The estimated average spending is between $175 to $210 per person. The aggregate amount spent has been on a steady rise since 2007. It is important to note that most states do not implement tax holidays on Valentine’s Day-related products but still meet high demand.
To assess the United States’ economy, we should consider how it pushes for nearly 70 percent of personal expenditure in the GDP. Thanks to its free-market economy, the United States lives on fairly competitive markets. This makes it very difficult for one company to overcharge buyers for a product because they will easily turn to another company that provides the same benefit for a lower, more competitive cost. When companies charge higher than market value, the demand for their product decreases, which will force them to decrease the price. Consumer demand is not limited to the price of one product, aspects like consumer income and the price of substitutes also affect demand. When the whole market value of nonessential items like flowers and chocolate are sold higher than what consumers are willing to spend, they look at substitutes. In 2021, there was a decrease in the amount spent on Valentine’s Day (from $27.4 to $21.8 billion) attributed to the economic uncertainty felt by households.
From the sellers’ standpoint, they are more willing to produce a good when prices increase. For a holiday, they will expand production in advance. This requires more resources (e.g. labor) pushing up prices. Producers cannot fully predict how people will spend their money. They produce early to determine what consumers are most interested in buying that year and adjust production to meet those demands.
After Valentine’s Day, the demand for certain products decreases, which explains why you can find post-holiday sales. Even as the chocolate price is higher during the Valentine’s Day season, the relationship between supply and demand regulates the price so that you have the option of purchasing between lower-quality but widely available to higher-quality but more limited goods. The existence of competitive markets allows most of the wage-earning population to enjoy the massive output of goods during any holiday.
The question then becomes how companies attract consumers to buy their products specifically. It comes down to two things: quality and advertising. If producers maximize their resources to create the highest possible quality goods within the constraints of the market price, they can attract more consumers. Advertising has become any company’s best friend. Companies advertise special edition releases and discounts on most forms of social media. Consumers also have a voice and can purchase products and review them. This serves as free advertising for companies, having a great effect on the demand for products.
However, company ads will still set effort to appeal to customers. Some ads might be attractive because of the unique nature of the product being offered. For example, Crocs teamed up with Sweethearts and created a Valentine’s Day-themed show and “Jibbitz”—aka the charms that you can buy to accessorize your Crocs. While the product met mixed reviews, it attracted consumers because it is a crossover between two well-known companies creating a new and interesting product. Another example is Starbucks, which releases year-round special edition cups and mugs. While the variation between the last Valentine’s Day line and this year may be minimal, consumers are attracted to the advertisement and influence from people around them. In the past, Dunkin’ has created social media competitions where people can pose with special edition donuts for possible discounts.
It comes down to creativity by companies to come up with innovative products and finding ways for buyers to become interested in them.