• Average amount spent on gifts per person will be £378, up 22% on 2005
• Spending on gifts across the UK to reach a total of £16.9bn
• Supermarkets fall in popularity as consumers plan to choose alternative shops for their gift purchases
• Pubs and clubs may need to work harder to attract punters, as anticipated spend on socialising will drop to £121 per person, a fall of 16% on 2005
• Total spend will be up 7.6% on 2005, highlighting a transfer of spend from socialising, to gift expenditure
• The Welsh will be the biggest spenders for the second year in a row with £731 in total
• Yorkshire will spend the least overall at £535

Consumer spending on gifts in December 2006 is expected to rise to the highest level in the 12 years. The annual Christmas Retail Survey, out today from Deloitte the business advisory firm, predicts the average amount to be spent on gifts will rise by 22% per person. This Christmas consumers are being much more generous and total spend on gifts will jump up by £2.2bn, to a record height of £16.9 billion.   

However, consumers do plan to make some cut-backs. The survey predicts a steep fall in spend on socialising, such as visits to pubs and restaurants and taking Christmas breaks, falling to £5.4bn in 2006, a drop of 26% in total. The decline is largely due to a cut in spending by women, who have slashed their ‘on the town expenses’ by 32% to just £92. Men on the other hand are still planning to spend £153, the same as last year.

Tarlok Teji, UK head of retail at Deloitte said: “Gift retailers can look forward to a bumper year, but the big pullback in spend on socialising may not bode well for the leisure industry, as hotels, pubs, and restaurants are expected to be hardest hit. Expenditure this year on food and drink will be flat and grocery retailers may need to pull out all the stops to attract more customers.”

Hey big spender

The gifts we plan to buy are more expensive than those favoured last year. More affordable stocking fillers such as books and DVDs have fallen down the rankings and are replaced with gift vouchers, clothes, jewellery, tickets (sporting and musical) and MP3 players – all of which are considerably more expensive.

A ‘thing for bling’

The youngest age group (16-24) seem to have a ‘thing for bling’ with 58% saying they are likely to buy an item of jewellery this year versus the national average of 49%. Last year jewellery and trinkets were by far and away one of the most popular items for females and those aged over 35. This year it looks like jewellery is firmly on the shopping list of both men and women.

Supermarkets out of favour?

Richard Lloyd-Owen head of consumer business at Deloitte, said: “Despite the upswing in expected consumer gift spend and the supermarkets big push into non-food, our research suggests supermarkets are less popular than they were last year, and the high street may see a small revival. Are the supermarkets’ fortunes about to change? Will the high-street bounce-back? This Christmas may be a turning point for both the high-street and the supermarkets.

 “Supermarkets are popular amongst consumers keen to get most of their Christmas food and gift shopping done in one place. Lots of non-food ranges on the shelves make it easier for shoppers to buy the weekly vegetables and pick up a gift or two at the same time. With spend on food and drink expected to be flat this year, attracting the gift shoppers will be crucial.”

Looking at where consumers plan to purchase their gifts reveals a marked shift in preferences. Overall the number of consumers opting to go to the supermarket to do most of their Christmas gift shopping has fallen from 8% last year to 6% this year, suggesting a slight fall in favour amongst busy shoppers. The research shows those braving the crowds will choose the high-street at 37%, whilst only 25% are choosing the department store.

Generosity and the empty nest

Younger age groups plan to spend hard this year. The expenditure of the 16-24 and 25-34 age groups have increased by 32% (to £635pp) and 16% (to £806pp) respectively. Interestingly, this is not supported by an increased use of credit cards or loans. Growing student debt could be acting as a deterrent to build up debt further. Youngsters seem to have more freedom and flexibility as well as increased disposable incomes. One explanation is the growing number of the stay-at-home kids. The rising cost of housing and further education are making young people stay at home for longer. With further expected interest rate rises, it is not surprising more young people opt to live rent-free with Mum and Dad and have a greater disposable income as a result.

Consumer spend forecast

Regional breakdown of the figures reveals the Welsh are the most generous and will spend the most on gifts, on average £443, followed by the North East with £440. People in the South West will tighten their belts the most this Christmas and expect to spend the least on gifts (£311), alongside people in Yorkshire who are also at the bottom end of the spend scale at £330.

Both the North East and Yorkshire have seen a massive fall in predicted spend on socialising, down 46% and 41% to £100 and £76 respectively, the lowest of all regions. By comparison those in the Midlands will be the biggest party goers this year with an average spend of £162 with Scotland a close second with £149.

When it comes to the total amount to be spent at Christmas by the regions, the Welsh rise again to the top of the rankings. The Welsh will be the biggest spenders overall for the second year in a row with £731 in total compared with Yorkshire which will spend the least overall at £535.

When will the tills ring this year?

Our survey suggests that Christmas shopping will start early again this year with 35% of eager consumers planning to start before the beginning of this month – an increase from 32% last year. Looking across the UK, those in Northern Ireland (52%), North East (42%) and Wales (44%) are the most keen and plan to start their shopping before November. The majority of shoppers (41%) will complete their Xmas shopping by mid-December.

Teji comments: “Although consumers tell us every year they plan to start shopping the month before Christmas, it’s interesting to see that a third of us won’t have finished all our shopping until Xmas Eve.”

The Christmas Retail survey in its 12th year, looks at the spending habits and moods of consumers and retailers ahead of the Christmas period.

Key findings

How much do consumers expect to spend this Christmas?

How much do men vs. women expect to spend this Christmas?

Average expected gift spend by region for 2004/5/6

Average expected food and drink spend by region for 2004/5/6

Average spend on socialising for 2004/5/6

Ends

About this survey

The survey findings were based on consumer data obtained by market research undertaken by TNS on behalf of Deloitte. Over 1000 adults aged 16+ were interviewed on 1-3rd September 2006. The respondents were selected according to a quota sample designed to be representative of all UK adults. Replies were also received from questionnaires sent out to over 350 of the United Kingdom’s retailers.  The retailers were from a cross-section of the industry.

About Deloitte

In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.  The information contained in this press release is correct at the time of going to press.

Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.

The information contained in this press release is correct at the time of going to press.