True to tradition despite disappointing environment: “Smart Santa” wants to get more for less for Christmas 2005

Annual Deloitte Christmas survey reveals Christmas spirit is still hanging on in Europe despite gloomy outlook for 2006.
Confronted with reduced spending power, consumers will arbitrate their expenditures in favour of presents for kids and spending on food.

According to Deloitte’s seventh annual consumer survey of Christmas spending, last year’s emerging “smart” consumers are now maturing and have built a strong know-how to identify the best deals and the best approaches to get more for less. Based on responses from 6.800 consumers across nine EU markets, anticipated European Christmas gift spending intentions are just slightly below last year (-3 %) but situations are contrasted.

“Christmas remains big in Belgium with a stable spending pattern, even in light of a downwards perception of the overall economic situation. The Belgian consumer continues to prefer traditional gifts that show value for money. High on the gift list we find CD, cassettes, DVD or  videos (52 %), cosmetics or perfumes, clothes, books and gift vouchers. Although travel-related items are high on the consumer’s wish list (36 %), the survey results show it is not often given as a present.“, indicates Koen De Staercke, Consumer Business Industry Leader for Belgium

Spending on gifts down slightly
Gift spending intentions are globally slightly decreasing but Deloitte’s survey reveals a very varied Europe: where strong increases are expected in Ireland (+8 %) and Spain (+6 %), noticeable reductions are planned in Germany (-9 %), Portugal (-6 %), Italy (-6 %) and the Netherlands (-5 %). Belgium shows a relative stability (-1 %) in its spending intentions.

Five main drivers of consumer confidence linked to shopping attitudes during the Christmas period have been identified:

• Perception of the economic background: the Belgian consumer is rather pessimistic in this regard as about 60 % of the respondents have a negative perspective on the economy and believe it is currently in a state of recession.
• Confidence in the political environment: 30 % of the Belgian respondents state their spending will be negatively impacted as they are less confident about how the government manages the economy.
• Rejected European constitution climate impact: although less explicit than for Europe on average, about one third of the Belgian respondents considers the constitution rejection to have no impact or even a positive impact on the economy.
• Job security perception for Belgium is in line with the average European score showing that just over half of the respondents (51 %) believe their job is secure.
• Current households’ revenues and short term perspectives: Belgian respondents are rather positive on the evolution of their financial situation as over 60 % estimates a status quo or an improvement.

Christmas spirit still hanging on in Europe
Consumers keep closely attached to the tradition of Christmas: most Belgians (95 %) will celebrate Christmas, and just more than half (51 %) will celebrate Sinterklaas/Saint-Nicolas. Sign of the solid Christmas roots is that 89 % of the Belgian respondents confirm they will decorate their house, which is very much in line with the European result.

Presents for their kids and spending on food will be preserved, but attitudes vary significantly: French people are the most protective of the tradition of providing gifts to their kids, while the Dutch and the British are more ready to sacrifice it to save money. In Belgium, only 19 % would spend less on presents for the kids, 59 % is willing to reduce spending on food and 66 % would spend less on presents for the adult family.  When it comes to food, the British, and surprisingly the Italians and the French will cut down. The Christmas turkey will appear on most European tables with only 20 % of European consumers declaring that the Asian bird flu will affect their poultry shopping. A notable exception: Italy, where 60 % of the respondents are planning to modify their consumption pattern.

The top overall wish list in Europe hasn’t made any big changes over the last years : CD’s and DVD’s are leading in most countries, in some it is still books, and in Portugal and Spain clothing is the number one as it was in the past in France. The Belgian wish list is largely in line with the European one: men especially like to receive CD’s and DVD’s (51 %) and books (36 %), while women prefer gift vouchers (47 %), clothes (45 %) and cosmetics (44 %). 

Gaps between wish lists and gifts remain, but they are narrowing. The biggest gap is expected in the cosmetics area (more offered than wished).

Generally spoken, gift vouchers are down on the wish list, up in the gift list: Ireland and the UK, where electronic versions of the vouchers are well implemented, come first as voucher providers. It is remarkable that 36 % of the Belgian respondents would like to get some kind of travel-related gift, while it is not even listed amongst the ten most frequently given presents.

The “kids enigma”
When it comes to kids, 41 % of respondents claim they don’t know what their children may wish. They are puzzled about the fun-only/educational nature of the kids’ gifts: while British, Irish and Germans prefer fun, Dutch and all southern countries’ adults prefer buy “useful” presents.  Over half of the Belgian respondents (57 %) has no idea on their kids’ most favourite presents and they show no clear preference for educational or fun presents. Traditional toys are the most bought presents for kids under 12, and then come electronic games and books.

Respondents require more innovative products as the number one reason to spend more during Christmas. Deloitte survey anticipates that the diversity of innovative products having been brought onto the market this year will generate more demand, especially for kids’ presents.

Half of European respondents consider the origin of the products they offer, and will consider the ethical dimension of the purchase. The least concerned are Belgium and The Netherlands where respectively only 37 % and 35 % of the respondents do care.

Internet attracts smart and capricious consumers
Last year emerging “smart” consumers, trying to optimize their spending, are now maturing. The value of the products is now the key issue as “Aldisation” made consumers understand that low price does not mean bad quality. When needed, consumers are ready to switch from branded to non-branded products.

The battle for the customer wallet will be this year at its peak in this key period for retailers: Christmas, with its large sales volume, is an opportunity to attract and, when successful, permanently re-route customers to their stores.
Stores inter format competition will be at its height everywhere in Europe, all having solid but less differentiated commercial arguments. Small hard discount formats rival super- and hypermarkets. Especially clothing retailers compete against renovated department stores which have refocused on fashion, demonstrating that store size is not the only response. Most players combine branded and non-branded assortment coupled with price attractive commercial propositions.

Loyalty programs have been developed to prevent customer volatility, and 40 % of customers plan to redeem loyalty points when shopping for Christmas: everywhere in Europe more points will be redeemed this year than last year, with the biggest increase in Ireland and in Portugal.

The Internet will be helpful with shop selection becoming more and more complicated: it is used to browse for products and stores (75 %), for price comparisons (54 %) and as a store itself (more than 50 % of the respondents will buy products and services on the internet this Christmas season). Internet maturation has added a new actor everywhere in Europe: 62 % of the consumers will spend the same amount or more on the internet this year compared to last year.

“Last minute shoppers will be a capricious but significant market to capture. This year again, the marketing and promotional initiatives that retailers will perform the last weeks before Christmas will be crucial to drive into their stores a vast majority of consumers having not yet made their shopping decisions. Unpredictable factors such as weather conditions, the avian flu, the petrol rise, the recent events in French suburbs which could spread throughout other European countries… may significantly weigh on consumer buying power perception” says Koen De Staercke.

About this survey
The Deloitte 2005 Christmas Survey, which is designed to measure consumer expectations about Christmas expenses, has been conducted by Deloitte each year since 1998. This year's survey polled 6.800 consumers across nine EU markets (France, Germany, Italy, Belgium, Ireland, the Netherlands, Portugal, Spain and the UK), comprising a representative sample of the population. It was conducted on the Internet by an independent research company.