$6 billion for Christmas lights?
If you're one of the many Americans going nuts with blinkies and rooftop Santa decorations, the economy thanks you.
According to data from the National Retail Federation and BIG Research, the U.S. is on target to spend more than $6 billion on Christmas decorations, up more than 8% from last year and the most spent over the seven years the group has tracked such data.
According to estimates by NRF, the average person is expected to spend nearly $47 on holiday decorations and an additional $18 on seasonal flowers such as poinsettias. That's good news for retailers like Lowe's (LOW) and Home Depot (HD) that sell Christmas lights and decorations. It also bodes well for retailers like Sears (SHLD), Costco (COST) and Target (TGT) that, this season, have started selling live Christmas trees online, with plenty of opportunities to add lights and ornaments to your shopping cart.
Christmas lights have been a lucrative business endeavor since the earliest days of electric light, according to a history compiled by the Library of Congress.
In 1880, Thomas Edison crafted a strand of electric bulbs and decorated his laboratory with them.
In 1882, Edison's business partner, Edward H. Johnson, took the concept a bit further and hand-wired an 80-bulb strand of red, white and blue light bulbs that he dangled around his Christmas tree.
The public, despite its willingness to use lit candles as decorations, expressed safety concerns and were hesitant to embrace electric decorations until 1895, when President Grover Cleveland made the technological leap for the White House Christmas Tree.
The real breakthrough came in 1903, when General Electric (GE) introduced far more affordable lighting kits. Before its entry in the marketplace, the cost of lighting an average Christmas tree would have cost roughly $2,000 in today's dollars, not even including the professional electricians needed to connect the strands to a power source.
Sales of Christmas lights also grew along with the fortunes of New York entrepreneur Albert Sadacca who, in 1917, began what would become the Noma Electric Co., which nearly monopolized the Christmas light market until the 1960s.
What may be helping drive up sending on holiday lights and decorations this year is that households are starting to own more than one Christmas Tree.
"We're finding that the many Christmas tree options available to consumers today are being utilized more and more as holiday decorative accents, such as wreaths, swags and garlands," Jami Warner, executive director of the American Christmas Tree Association says in a statement. "The two-plus-tree household is evidence that the family Christmas tree has evolved into a design feature, both indoor and out, rather than the main traditional decoration during the holiday season."
For those fed up with tangled cords, missing bulbs and cracked Santas, there is also a thriving business among those willing to string your lights for a fee.
In addition to the many professional decorators one might find locally to deck your halls, one company has built a North American network of holiday decorating franchises.
Christmas Decor was started in 1986 by Texas businessman Blake Smith as an offshoot of his landscaping company. As more and more customers prove willing to pay him for professionally installed decorations, he decided in 1996 to expand the concept nationally. Today, the company serves more than 40,000 residential and commercial customers in 48 states and Canada with more than 300 North American franchises.
Brad Rangel, marketing specialist for The Decor Group, says both the economy and seasonal weather have led landscaping businesses to pursue a sideline in holiday cheer.
"They really like it because business starts to slow down around October and November, so it's a perfect fill-in for a lot of them," he says. "We've also started getting some interest from painters, roofers and guys like that who just don't have a lot of business during the winter months. We market it, from a recruitment standpoint, as a diversification of their services and, not only that, they don't have to lay people off. It's a good way for them keep their crews busy, and that way they don't have to go out and try to find new help in the spring."
Christmas Decor handles all aspects of holiday decorations, from design and installation to takedown and storage. The company will return as needed to replace any burned-out bulbs.
Safety considerations add to the appeal of the services, Rangel says.
"That's really something people pay attention to, especially with the baby boomer generation," he says. "They are getting a little older and they don't want to be climbing up ladders anymore, especially during the winter months. It's definitely a plus for them to be able to hire it out, take it off their plate and know it is going to be done and done well."
The cost of the decorating service varies according to size and complexity. Rangel says, however, that most homes fall in the range of $1,000 to $1,200.
"I hate to reference the economy so much, but you have to be a little bit more malleable because our guys have to find a way to do it at a reasonable cost and not price themselves out of the market," he says.
Christmas Decor typically provides all the lighting, but can incorporate older items customers may want added for sentimental reasons.
"We are not married to our products 100%," Rangel says. "If they have got that something special they want to pull out of the attic, we can try to incorporate it in as much as possible. For the most part our core commodity items -- our roof lights and mini lights -- we want to use our own stuff. We know we aren't going to have the service issues like we might by using somebody else's product."
Rangel says his company is using energy-efficient LED lights for most homes. The lights, although more expensive than traditional bulbs, are touted as using up to 90% less energy.
How much you spend or save with each winter's decorations will vary along with utility rate and the number of lights used.
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