Category Archives: Consumerism

One Third of Consumers with Debt Face Collection Agencies

Consumerism, , ,
One third of consumers with debt end up with the debt collector
One third of consumers with debt end up with the debt collector

According to a recently published study from the Urban Institute, 35 percent of Americans have had their debt and other past due bills reported to collection agencies.

Caroline Ratcliffe, a senior fellow at the Urban Institute, a Washington-based think-tank, explained that often consumers get behind on their credit card payments or their hospital bills. Mortgages, car loans and student loans are also put aside, unpaid. Sometimes gym membership fees and cellphone bills can also go to a collection agency if they remain unpaid for too long. Once debt ends up in the hands of a collection agency credit scores and job opportunities can be negatively affected.

“Roughly, every third person you pass on the street is going to have debt in collections,” Ratcliffe said. “It can tip employers’ hiring decisions, or whether or not you get that apartment.”

The results of the study showed that 35.1 percent of all people with credit cards have been reported to collection agencies for debt averaging $5,178, based on records from September 2013.

The vast majority of this debt is concentrated in southern and western states. Texas is overly represented to collection agencies, with 44.3 percent in Dallas, 44.4 percent in El Paso, and 51.7 percent in McAllen. Las Vegas has about half of its residents with debt in collections.

Ratcliffe blames frozen salaries for much of the debt problem in the worst hit states. In many places wages have been struggling to keep up with inflation during the past five years of economic recovery. In an unrelated survey Wells Fargo discovered that after-tax income dropped for the lowest 20 percent of earners during the same time frame.

Groupon Elects Alexander Hamilton as President for President’s Day

Consumerism, ,
Alexander Hamilton portrait by John Trumbull
Alexander Hamilton portrait by John Trumbull

In what some might say is an embarrassing gaffe Groupon, the on-line discount company, released a coupon for President’s Day featuring President Alexander Hamilton as “undeniably one of our greatest presidents…”

Unfortunately, although their heart may have been in the right place, it is easy to deny, since Alexander Hamilton never actually served in the US’s highest office. Hamilton was one of the Founding Fathers of the US; chief of staff to General Washington; an influential promoter and interpreter of the Constitution; the founder of the first American political party; and the founder of the country’s financial system. He has a great résumé, yes, but he was never President.

Groupon issued a $10 bill to be used with a $40 purchase, with Hamilton featured on the bill. Since Hamilton adorns real $10 bills it is easy to understand how Groupon could have made the mistake to think that Hamilton served as President, if you assume that our paper money only uses former Presidents as adornment.

The promotion for the coupon, which was released last Friday explained that, “Groupon Celebrates Presidents Day by Honoring Alexander Hamilton,” telling their customers to “Commemorate a man historically powerful enough to be on money with $10 towards $40 on a local purchase while they last.”

The rest of the release, which was still up on Groupon’s press page on Sunday continued, “The $10 bill, as everyone knows, features President Alexander Hamilton — undeniably one of our greatest presidents and most widely recognized for establishing the country’s financial system.”

Compounding the mistake on the website, there was also a picture of the $10 bill with the following caption: “President Alexander Hamilton on the $10 bill.”

Haggling is New Business Mode

Consumerism, , ,
Black Friday
Black FridayDa

Consumers are becoming bolder.  Since they have access to prices of the same item in other stores at their fingertips due to smartphones, they are using this is as a bargaining tool.  Rather than getting hot under the collar about this, some companies are following the old adage, ‘if you can’t beat ‘em, join ‘em’ and using this to their advantage.  For example, during the holiday season Best Buy, invited their customers to come bargain with them on items, as long as they provided proof of lower prices.  Other stores are doing the same – although they might not be advertising this outright.

Still, employers are actually now training their staff in the art of making deals.  Bargaining still has to be conducted with style.  As VP for Consumer Strategy and Insights at Daymon Worldwide, Virginia Morris notes, it must be “consumer-initiated,” and offers made need to be reasonable and done in a polite manner.  And the customer realizes also that the store does not want to lose their custom.  So they will try to be accommodating as much as possible, should the haggle be reasonable.

It seems a lot of work is still needed if the US is going to recover its peak on shopping sales from last year.  According to figures from the National Retail Federation, even though stores were open for four days over the Black Friday-Thanksgiving time span, sales dropped 2.9 percent from last year’s figure to $57.4bn.  It should be noted that this figure is the first decrease in seven years since the Federation has been estimating spending.

So what else are stores trying in the hope of drawing in potential customers?  Leigh’s Fashions in Breton Village were handing out glasses of wine or cups of coffee in an attempt to de-stress the consumer shopping experience.  According to one of the store’s co-owners, Rebecca Weirda, they did this in an attempt to distinguish their store from the mall experience.  They also offer free wrapping services and shopping parties during December.

The week following Black Friday the amount of store shoppers dropped by nearly 22 percent.  However, economically, this figure does not account for those who are shopping online.  Still, the figure is tough for those retailers who anticipate making 40 percent of their revenue in the last two months of the year.

Disappointed Retailers Lamenting Poor Black Friday Performance

Consumerism, ,
Crowd Outside Macy's on Black Friday 2013
Crowd Outside Macy’s on Black Friday 2013

For the first time in seven years post-Thanksgiving Day weekend, pre-holiday retail sales dropped in what analysts say is a reflection of lack of confidence by consumers in the US economy and wages that are going nowhere.

Black Friday sales were only able to reach $57.4 billion for the weekend, about $1.7 billion short of Black Friday sales for 2012. The average shopper spent $407.02 this year, compared to $423.55 last year.

ShopperTrak, a market research company, says that, despite many stores being open on Thursday, including Macy’s for the first time, actual foot traffic to stores was down by 11 percent while sales fell by 13 percent on Thursday.

Now retailers have set their sights on Cyber Monday, the big online shopping day, hoping that shopping on that day will make up for the anemic shopping on Thursday.

“We expect Cyber Monday to be bigger than ever,” said National Retail Federation’s Matthew Shay.

Brooks Brothers Venturing Into Upper-Crust Eatery Business

Consumerism, , , , ,

Brooks Brothers, well-known for its high-end men’s clothing has decided to expand into

Hungry? Soon You Can Eat with Brooks Brothers Style
Hungry? Soon You Can Eat with Brooks Brothers Style

the world of fine dining. This is a first for the retail establishment, joining the ranks of other such ventures launched by others such as Tommy Bahama and Macy’s.

Brooks Brothers business plan is strikingly different, however, than those of both Tommy and Macy’s. Tommy runs about a dozen or so restaurants inside their stores, dubbing them Islands. The original Island-bearing store opened in 1996 in Naples, Florida, and brings into the cash box about $2,000 per square foot, over two times the sales at the company’s non-Island stores.

Macy’s stores have also had restaurants within the walls of their mega department stores for many years. The recently opened Stella 34 Trattoria, at Herald Square, is run by the Patina Restaurant Group, the same company that runs their other eateries. Macy’s Chief Executive Officer Terry Lundgren told investors that, because of the great views and better reviews, “the restaurant is doing spectacularly well.”

Brooks Brothers has a whole other approach to feeding the hungry hordes in mind, however. Their store, which will go by the moniker “Makers and Merchants, will not be inside the premises, but around the corner from its main store in midtown Manhattan.

“As the restaurant concept is still in development and not planned to open at least until summer 2014, we have no further comment,” company spokesman Arthur Wayne wrote in an e-mail.

The restaurant will be housed in the 15,000 square-foot space that used to be the Brooks Brothers women’s line, on East 44th Street. This stand-alone paradigm means the restaurant will have to compete with every other fancy restaurant in midtown Manhattan, a distinct disadvantage over the Tommy Bahama and Macy’s models, which entices people to come an eat while they are in the middle of building up heady appetites spending money.