Spending on luxury items falls by 40%

SPENDING on luxury items is down 40% as consumers cut back on eating out, visits to the hairdresser and shopping for clothes.

One in six people are smoking less than this time last year while two in five are drinking less, according to a survey on spending habits.

Women have cut back significantly, with two-thirds saying they have reduced the frequency of either clothes shopping or visits to the hairdresser.

The Red C survey conducted for consumer website, saveafewbob.ie, among 1,000 respondents, also found that just over half said they are now eating out less compared with this time last year.

Chief executive of the Consumer Association Dermot Jewell said these results show how price conscious shoppers have become. “Consumers are determined not to spend money if they don’t see value,” he said.

Half of respondents said they were shopping less for clothes than they were this time last year while one third claim to visit the hairdresser less often.

Two-in-five said they were buying less takeaway coffee.

Founder of saveafewbob.ie Niall McHenry said a frugal mindset has swept the nation. “Our research shows that Irish consumers are cutting back considerably on discretionary spend.

“Retailers, restaurants and other service providers are bearing the brunt of this recession. Today’s consumers are motivated to obtain value for money and if they don’t believe that they are receiving value they are voting with their feet.”

Figures released recently from the Central Statistics Office (CSO) found that retail sales fell 15% in July, mainly due to a 50% slide in car sales.

The figures showed big slides in the annual volume sale of household equipment, which was down 17%, and clothes, down just over 9%.

Bar sales were down about 10% and electrical goods down 9.6%.

Professor of marketing at UCD business school Professor Mary Lambkin said, however, that consumers are starting to spend again, but are still watching out for bargains. “There’s a sense that people are attempting to get back to normal life by eating out more and spending that bit more. However, they are now looking for the best value options.”

Prof Lambkin said in a recession people behave in a rational manner by cutting back on luxuries.

“People can postpone a haircut or buy less luxury items in the supermarket, but they won’t cut back on essential things such as basic food items or petrol if they use their car for work,” she added.

Sales of household appliances and furnishings will always drop sharply in a recession according to Prof Lambkin, who said sales of these products are down about 30% over the last year.

The Red C survey did also reveal that playing the Lotto has increased in popularity, with one in eight saying they are playing the Lotto more often than the same time period last year.


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