Speaker key
DR - David Riley
UM - Unidentified Male
UF - Unidentified Female
IV - Interviewer
TT - Tarlok Teji
[Music]
DR - Hello and welcome to the Deloitte Retail Review podcast. I'm David Riley and in this programme I'll be talking to Tarlok Teji, head of retail at Deloitte, about what the Christmas period holds for consumers and for retailers. You can download a copy of the report from Deloitte's website, deloitte.co.uk/theretailreview. But first we visited London's Borough Market to see whether the Christmas spirit had descended yet and when people were planning to start their Christmas spending.
UM - Christmas Eve. A typical man.
UF - Probably in the next couple of weeks. But if I'm out, I'll see things and then I'll do it. But definitely not last minute.
UM - About 20th December.
IV - So you're kind of a last minute person.
UM - Definitely.
IV - Where do you think you're going to buy most of your presents and food from?
UF - I guess probably, sort of, local high street shops and some Internet shops.
UM - Plenty of Internet and then a rapier strike with a list on the last day.
UM - Well, I go the House of Fraser and they do everything for you. You go in there, you talk to a girl and she says I'll shop for you. You tell her what you want and she goes and she lets you choose, then they wrap it all up for you. Just exactly what I want.
UM - More and more online really. It has been, in the last couple of years, more online.
UF - And more the little local shops and crafty things.
UM - Yeah. We try and get things that are quite individual, quite special. But major things, CDs, book, things like that, definitely online.
IV - Are you planning to spend more or less than last year or about the same?
UM - Less.
IV - You seem very definite.
UF - We're just trying to…
UM - Cut back, basically.
UF - Cut back.
UM - It's expensive.
UM - Less. New baby.
UM - More on her, less on everyone else.
UF - Same or less just because I think it's just over the top and unnecessary to spend too much.
UM - I don't do Christmas shopping ever, ever. I leave that to my Mrs. She's dead easy, you just say, here's the list, love, there's the money, go and do your best.
DR - [Laughs] Well, that's one way of looking at it, I suppose, Tarlok. But it is a very unscientific cross-section we've got there, but how does it tally with your survey?
TT - Well, we've been doing a scientific study for over ten years and it is consistent in a number of places. Christmas shopping is being done later and later every year. But there is a little inconsistency also because although people say they're going to spend less, they actually end up spending more and that's certainly what they told us when we took this survey back in September. Online shopping has definitely come of age, that's going up this year. We're seeing a technology emphasis as well on what we buy and, of course, a lurch towards luxury. People just want to indulge this Christmas on everything from gifts, food and socialising.
DR - Yes. Well, one of the reasons we went to Borough Market is because farmers' markets across the country could be in for a lift this year with this desire for better quality food, then.
TT - Absolutely. It is the first time we've seen this trend away from the supermarkets actually to localisation. The consumers are telling us they're going to go to independent stores. They want to shop at farmers' markets and they want local produce. Even locally produced stuff that supermarkets are now promoting, we've seen a huge surge in those particular products taking off. So localness is really becoming quite important.
DR - So if there's this trend towards more luxury, does that mean people are going to cut back elsewhere to pay for it?
TT - They certainly haven't told us they're planning to cut back. Premiumisation, as it's called, people are trading up and they want their designer handbags and shoes and all these things are on the shopping list.
DR - This is all quite surprising, given the reports in the papers about the credit crunch and everything. Do you think people are going to be drawing their horns in and spending less because of the credit crunch?
TT - When we ran the survey, consumers told us that they were going to spend 7% more this year. Then, of course, the news stories broke around the credit crunch and we decided that we really needed to re-run the survey in November. And the results have come back and they are insignificant in terms of change. In fact, the total spend has gone up from £706 to £712. So our conclusion is that there is an underlying resilience to spend. There are a number of reasons for this. People do behave differently at Christmas than they do the rest of the year. We do live in an affluent society; the rich are getting richer faster than the less well off. But even the less well off are better off. We've really never had it so good. The UK's also a magnet for migrants, not just in London and the South East but in all the countries in the UK. And, finally, in our survey, 50% of the people said that they actually saved for Christmas, so they've put the money aside for Christmas, so they're going to spend it. So this could be the last hurrah before the spend rollercoaster goes over the peak at Christmas.
DR - You said a 7% increase in spending, how much in total do you expect people to spend on Christmas?
TT - Well, we've added up and done the sums and it's about £712.
DR - Yeah. And is that the same sort of amount over the country or are there regional variations within that?
TT - There are regional variations, just to talk of two, and these are pretty consistent year on year. The Scots always come out the most generous, and that might be a surprise to you, but they do. And at the other end of the league table, Yorkshire folk are just careful with their money.
DR - Well, as a Yorkshireman, I can understand that. We also asked people when we went to Borough Market who was easier to buy for; men or women? And here's what they said.
UM - They're equally difficult, I'd say.
UM - It's far easier to buy for women, easily.
IV - Why is that?
UM - Because they want everything.
UF - I think women are probably happier with more, sort of, varied presents that are available and men just tend to be, I don't know, beer or gadgets, that kind of thing, so yeah.
UF - I can always think of lots of things for my friends and female family.
IV - But men are more difficult?
UF - I think so, yeah.
UM - There are always socks. Socks and hankies, gift vouchers.
DR - [Laughs] Well, again, there's some key phrases in there, aren't there? Beer and gadgets was one that warms my heart. Does that surprise you, the sorts of things that people said there?
TT - Not at all. Entirely consistent with the messages we're getting. Ladies want to get clothes, fragrances, gift vouchers and, as I mentioned earlier, jewellery and designer handbags. And for the gents, it's CDs, DVDs, gift vouchers, money and, of course, the beer and gadgets.
DR - Yeah. Oh, good old gadgets. Gadgets, then, is this part of a big trend? Is this what you mean by going electric at Christmas? I mean, my daughter, my youngest daughter, wants a Wii for Christmas, is that part of that trend?
TT - It is part of the trend. In fact, technology has truly come of age. Not just from people shopping online, but there are more techie products like the Wii and the iPhone and even if you get a doll these days, they have so much technology built into it nowadays, people don't just want a plain vanilla doll, they want one that talks to you and does things. But the preponderance of technology, it's shaping all our lives right now. There were phrases that were unheard of in our parents' generation or, certainly, they meant something different. Like Amazon, eBay didn't exist, iPhones, Blackberry, Blue Tooth, these are all part of the digital dictionary for our generation's x, y and z and they actually shape their shopping habits.
DR - And is this sort of optimism and this spending pattern for Christmas going to be carried over into 2008, do you think?
TT - That's a very good question, given that things are tightening. The economic indicators show that the economy's tightening up in terms of money availability. We're seeing a repeat of 2005 where people are intent on having a good time this Christmas and then we're predicting February, March, things may well fall off the cliff. And if retailers aren't prepared for that, they may well need a slimlining diet in the New Year.
DR - What's on your Christmas shopping list this year?
TT - Well, for me, I think I'm looking forward to that iPhone.
DR - [Laughs] Have a good Christmas, then. Tarlok Teji, head of retail at Deloitte, thanks very much. And that's it for now. Remember, you can get your own copy of the Retail Review by going to deloitte.co.uk/theretailreview. Until next time, thanks very much for listening.
