Gift Cards, Big Macs and the Economic Slowdown
With the economy this bad, people obviously are cutting back on their spending. But they’re also changing their spending patterns, and those choices sometimes provide a clearer picture of the economy than a detailed set of statistics.
First, the gift card. Once a staple of Christmas stockings, the gift card is losing its popularity, mostly because people don’t want to buy one from a retailer that might go bankrupt, Reuters reports. That’s not an irrational fear. Circuit City, Linens ‘N Things, and Sharper Image are among the retailers filing for bankruptcy recently. Give someone a gift card to one of those stores and it’s not clear they’ll be able to use it.
While retailers will often ask the bankruptcy court for special permission to continue accepting gift cards once they have filed for bankruptcy protection, that permission can go out the window if a retailer liquidates stores and closes its doors.
After Sharper Image filed for bankruptcy it initially stopped accepting its gift cards. The retailer then said it would honor the cards if shoppers redeemed them in full and also purchased an item that cost double the value of the card.
That’s a bit grinch-like, in my opinion.
I’m not the only one. Instead of spending on gift cards, people are putting down their cash….at McDonald’s, Consumerist notes. Sales were up at the fast food chain in October, as people apparently switched from dining at nice restaurants to buying Happy Meals and Big Macs.
I think the headline on the Consumerist piece pretty much sums up the altered view of consumer spending these days:
“McDonald’s Sales Rise 8.2 percent in October as More Switch to Eating Crap.”