€1.5bn festive spree to be retail lifeline
Expenditure is expected to be reduced by up to 10.6% on last year and the spree will be 33% smaller than in 2008 but the nation’s love affair with the season could still prove a lifeline for struggling retailers.
Each of the country’s 1.5 million households intends spending an average of €1,020 over and above normal bills, comprising €650 on presents, €250 on festive food and €120 on socialising outside of home.
The figure is almost twice the European average of €590 and places us second in the European Christmas spending league, which we topped last year. Luxembourg are the league leaders this year.
Financial firm Deloitte, which produces the annual survey, said the results showed national sentiment towards the time of year had not changed markedly with the actual value of spending remaining high and the reduction this year not so dramatic as the 18% drop between 2008 and 2009.
However, Susan Birrell, consumer business partner at Deloitte, sounded a note of caution.
“There are some positives to be taken from this in the sense that people do still intend to spend over Christmas. That said, we cannot predict what the Budget will bring so we have not been able to factor that in,” she said.
“There are things known now that were not known when the survey was carried out.”
One of the notable trends in this year’s survey is the growing popularity of online shopping, with half of consumers saying they would shop over the internet and would spend over a third of their €650 average gifts’ budget on items bought from online stores.
Torlach Denihan, director of Retail Ireland, asked shoppers to consider the effect of buying from overseas suppliers when shopping online.
“If those figures are representative of Irish households generally, that would be a very large sum of money and one would be concerned in terms of employment here if a significant portion of it was leaving the country,” he said.
Deloitte’s survey shows lower prices are the main reason shoppers buy online but Mr Denihan said the perception did not always match the reality.
“Prices in Irish stores have come down significantly in the last year.
“Clothing and footwear are down 9%, consumer electricals are down 15% and games, toys and hobby goods are down 6%, so there is very good value to be had here,” he said.
Shoppers are also changing the way they finance their purchases with people more cautious about relying on credit.
Half said they would pay for more of their purchases with cash this year and a third said they were saving more to have money in reserve for the December spree.
Nearly half said they were using loyalty points more.
The main reasons consumers said they would spend less this year were the state of the economy and the fact that they were in debt.
Only a quarter of those questioned who were in jobs felt secure about their employment and over a quarter were not working.
Half said they believed the economy would worsen in 2011 and 37% believed their own household’s financial position would also deteriorate.
THE figures in the Deloitte Christmas spending survey are based on the results of a national survey conducted in the last two weeks of September. A total of 642 people aged 18 and over were quizzed about their spending budget for Christmas gifts and extra food and out-of-home entertainment and leisure, in an exercise mirrored in the other European countries. It is Deloitte’s 13th annual Christmas spending survey.
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