BC Expert: Holiday Spending
Economics Associate Professor of the Practice Can Erbil
Erbil is an Associate Professor of the Practice in the Department of Economics at Boston College who specializes in international trade, policy modeling and economic development. He is also the Director of Economic Modeling School and Research Fellow at EcoMod, Global Economic Modeling Network, where he is involved in research, teaching and consulting on economic modeling. Erbil organizes and teaches workshops in countries like Singapore, Ecuador, Venezuela, Turkey, Bahrain and UAE; the workshops are attended by a wide range of individuals in the field, including employees of Central Banks, Finance Ministries, International Institutions, think tanks, NGOs, as well as private businesses. Erbil is a former consultant at the Boston Federal Reserve Bank and previously was with the International Trade Division of the World Bank. There, he conducted intensive empirical research using international data sources, and delivered policy recommendations to client countries on issues such as trade policy, integration, market openness and export competitiveness. He continues consulting for the World Bank on several different projects related to international trade and health policies.
“All the indications tell us that it’s going to be a good season for retailers,” says Can Erbil, Ph.D., Associate Professor of the Practice of Economics at Boston College. “Low unemployment, low gas prices, and the fact that we don’t have the threat of a government shutdown like we had last year means there’s a lot more confidence in the economy. So we expect the numbers to be higher this year.”
Erbil says hiring sectors specific to holiday spending will approach records levels this year, as will the discounts being offered. Since 2008, Black Friday retailers have offered an average discount of 36%, but this year’s price cuts could be even deeper thanks to consumer expectations.
“Disposable income is up from last year but consumers are more frugal - they will look for better deals and expect better deals so that creates a price war among retailers,” says Erbil, a current consultant with the World Bank. “We expect the discounts to be larger this year – close to 50% in some instances. However, some of the discounts are not real discounts because these are not discounted from the original price - the price is hiked up before the discount is applied, so there is some trickery going on.”
Millennials will have a significant presence this year, which may be a mixed blessing.
“This will be the first time millennials are going to be major shoppers,” says Erbil, who previously worked at the Boston Federal Reserve Bank. “It’s good news because a lot of them have the tradition of going to the malls – they see this as a social activity. At the same time, the average holiday budget of a millennial isn’t as large as the average shopper – they have a budget of about $250 compared to the average shopping budget of $400.”
Erbil says gifts cards will continue their popularity, with the average shopper spending $170 this season, a jump from the $160 the average shopper spent on the cards last season.
“Gift cards are getting bigger and bigger,” says Erbil, Director of Economic Modeling School and Research Fellow at EcoMod, Global Economic Modeling Network, where he is involved in research, teaching and consulting on economic modeling. “They have increased more than 80% in the past decade.”
“Overall, it’s going to be a favorable season for retailers due to the consumer confidence and strength of the economy.”
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