Consumption to grow slightly during this year’s Christmas season

Bucharest, Romania – November 12, 2009 – Romanians’ winter holiday spending (including gifts, food and drinks, and socializing activities) are expected to grow slightly during this year’s season (+ 0.2%), as the psychological effect of the economic crisis has led to fundamental changes within European consumers’ behavior. The average growth for Eastern Europe is 0.7%.

The conclusion is included in Deloitte’s report on consumer trends during winter season - “Chrismas 2009 – The Rebound?”

“Two-thirds of Europeans and 58% of Romanians plan to limit their holiday spending, given the crisis atmosphere. This is, however, an ostensibly finding insofar as consumers also indicate that 79% of them do not fear losing their job and more than half of them are not in debt. Consequently, the leading cause of lower consumption is above all that morale in Europe and in Romania has reached a low point,” shows the final report. “This is an important finding to take into account in the context of advertising messages conveyed by manufacturers and retailers offering reasons for optimism and reassuring consumers as to the reasonableness of their purchases by promoting usefulness and low prices.”

Main conclusions of the Romanian country report 

• 78% of Romanians say the economy is in recession;
• 89% of Romanians consider as lousy the Government reaction against the financial crisis;
• 48% of Romanians believe the economy will improve or stay the same in 2010, while 45% believe it will deteriorate;
• 66% of Romanians believe the economic decline has a direct impact on their financial situation; 
• Nearly 1 in 4 Romanians have little interest in the economic health of the company they are working in;
• 48% of Romanians believe their job is secure in 2010;
• 59% of Romanians say their spending power has decreased, compare to the same period last year; 
• 67% of Romanians believe the financial position of their household will improve over the following 12 months;
• 35% of Romanians say they will continue to spend less once the crisis is over, while 46% say they will spend the same; only 19% will increase spending. 

Romanian consumer behavior during winter season:

• 30% of consumers intent to spend more on gifts this year, compared to 28% who will spend less; 
• 29% of consumers intent to spend more on food & drinks this year, compared to 23% - less;
• 52% of Romanians intent to spend the same amount of money as last year on socializing activities; 
• 28% of Romanian consumers purchase their year-end gifts in advance, while 23% - after the holidays, so as to benefit from the best prices and avoid crowds in stores;
• The crisis has changed the consumers’ behavior, 45% of Romanian participants saying that they would limit impulsive buying, while 68% will focus on useful gifts;
• Two thirds of consumers prefer Romanian products, a trend becoming keener as they get older;
• 68% of Romanians will do their holidays shopping in hypermarkets;
• Internet use: 
  • Two thirds of Romanians use the Internet for research and to compare products and prices; 
  • Men and individuals aged between 35 and 54 are more inclined to use Internet for purchasing; 
  • Women and older consumers use the Internet for research and price comparison.

Top 10 preferred gifts in Romania

1. Cosmetics / perfumes (46%)
2. Cloths / shoes (44%)
3. Jewelry / watches (36%)
4. Interior design (35%)
5. Books (35%)
6. Cash (33%)
7. Laptop (32%)
8. Travel (28%)
9. Food & drinks (25%)
10. Mobile phones (other than an iPhone) (23%)

Savvier consumers are adopting more rational purchasing behaviors

The 2009 Christmas Survey is Deloitte’s 12th publication on Europeans’ purchasing intentions for the year-end holiday season. This year, the survey covers 18 countries in Western Europe, Eastern Europe and South Africa. A similar study has been done in the United States. Romania has joined the project for the second time. Fieldwork was executed in September 2009 (last week) – October 2009 (first week), based on a structured questionnaire and a sampling of consumers selected according to specific criteria (518 people for Romania; more than 17.500 people overall).

Prepared in an exceptional economic environment, the study inquired on respondents’ state of mind and the amount that they intend to spend on gifts, additional food/drink purchases for holiday meals and leisure activities. Given the global economic and financial crisis, consumers have now a more prudent approach.

“A new breed of consumer is evolving, making new types of trade-offs. This new consumer prefers utility, durability, making carefully considered purchase decisions and avoiding impulse buys, rationally comparing prices, assessing the quality of innovations based on their real substance. The crisis has been a learning experience for consumers. These more rational, more carefully considered behaviors will be here to stay after the crisis has abated. For retailers and Business Consumer companies the challenge will be to adapt to clients’ new needs and bring the market back to the consumption level prior to the crisis“, said George Mucibabici, Deloitte Romania Chairman.

New purchasing patterns are emerging: more frequent use of the Internet and new media to find the best price; consumers say they prefer products meeting sustainable development criteria and manufactured within fair trade standards; national brands are losing ground against retailers’ own brands, which given lower prices are now setting the reference sale price.

“Competition will be fierce among retailers. Despite this backdrop, retailers have opened new sales space, they have launched novel sales concepts and internet use is growing. In a nutshell, retail supply is fragmenting and is growing at a faster pace than demand, which is stagnating. This means that the hunt is on for customers, who will end up reaping the benefits of promotions and highly attractive prices. On the other hand, the profitability of certain retailers that do not respond as well to customers’ expectations will suffer,” commented Gilles Goldenberg, the partner responsible for this survey in Europe.

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