Slovaks to Become More Prudent in Spending, Although the Desire to Celebrate the Holidays Remains Strong

Bratislava, November 9, 2011 – This year, Slovaks intend to increase their Christmas spending slightly compared to last year to an average of EUR 437. They intend to focus on traditional gifts, such as cosmetics, books and clothing. Despite the unfavourable economic conditions, Slovaks believe that next year their spending power will improve slightly. These are the conclusions of the recent Christmas spending survey issued by Deloitte.

“This year Slovaks are prudent, although the desire to celebrate the holidays remains strong,”

— Adham Hafoudh,
Partner, Tax, Deloitte Slovakia

More than six out of ten European consumers believe that their country is presently in recession; although in some countries this general perception of recession is stronger, uncertainty is notable in all countries surveyed. Consumers, however, are willing to admit that the “crisis” is yet to affect their perception of their future spending power: 60% of respondents believe that their spending power remained unchanged or even increased. Slovaks also stick to that opinion: 43% of respondents declare that they have the same amount of money to spend as they had a year ago, while more than a third of respondents believe that they have less to spend.

“This year Slovaks are prudent, although the desire to celebrate the holidays remains strong. Despite negative expectations regarding further economic development in Europe, consumers believe that their spending power is generally stable” said Adham Hafoudh, Tax Partner of Deloitte Slovakia.

As seen from the results of the recent survey, European consumers’ outlook on 2012 is mostly concerned with the further development of the economic situation: a change from the results of our past surveys. Similarly to respondents from Finland, Russia and Ukraine, Slovak consumers expect that there will be a slight improvement in their financial conditions, which classifies us among the more optimistic countries.

In 2011, European consumers intend to have a budget for year-end festivities averaging EUR 587, down just 0.8% from last year. The average budget of a Slovak family is EUR 437, up 6.6% from last year. On average, Slovaks will spend EUR 289 on gifts and EUR 121 on food, which is similar to the spending figures for 2010. Slovaks intend to spend an average of EUR 27 on entertainment and leisure activities, including visits to restaurants and bars, which are characteristic of the year-end festivities. However, this is only a fraction compared to the Swiss and Irish, whose intended spending on entertainment exceeds EUR 100. For the sake of comparison: an average Czech family will be in the position to afford spending EUR 507 on gifts, while the average Polish family plans to spend EUR 463. The most expensive Christmas festivities will be amongst Irish families, with the average Christmas budget set to EUR 943.

More than 80% of Slovaks will be focused on purchasing useful gifts; however, unlike 65% of Europeans, Slovaks do not intend to purchase goods on sale, or to reduce their spending on gifts significantly by any other means.

Consumers, however, are less willing to take on debt through credit purchases. The presently prevailing trend in Slovakia is to make use of customer loyalty points, gift cards, but, surprisingly, given the stated unwillingness to take on further debt, also credit cards. This year, most Christmas purchases in Europe (up to 72%) will be paid for in cash.

“For the first time this year, the survey results note a convergence between the most wanted and most purchased gifts. Books and cash are the most wanted gifts and tend to be the most purchased as well. Slovak consumers remain traditionalists when purchasing gifts. This year, similarly to prior years, most of us wish to receive books (62%), the second most wanted gift is cosmetics and perfumes (35%), with clothing in third (32%). In Slovakia, the most offered Christmas gift will be cosmetics (68%), which will be given in more than half of households, followed by books and clothing (39%). Similar gifts will be offered to children: those under the age of 12 will mostly get toys (29%), while teenagers will be offered books (15%)” said Ľubica Dumitrescu, Tax Senior Manager, Deloitte Slovakia.

A certain appetite for beauty care products and related services is taking hold across Europe. Aside from the popularity of cosmetics/perfumes, the category corresponding to beauty care products/massage sessions/spa treatments has taken third place among the most purchased gifts. This trend in favour of well-being also reflects the preference of consumers for more personal pleasures. As was the case last year, the key factors in deciding upon purchases for the 2011 holiday season result in a preference for products with demonstrable usefulness and availability at good prices.

In Slovakia, the internet is strengthening its position as a retail channel for Christmas purchases, although the importance of the combination of online and offline channels is growing mainly for the research and comparison of products and prices. As only 13% of Europeans (20% of Slovaks) plan to complete their purchases online, it can be concluded that online shoppers have higher attrition rates than offline consumers. Consumers mainly appreciate the ability to find information online that they are unable to obtain in stores, such as the opinions of other consumers, along with the ability to shop at any time of day or night; internet shopping also allows consumers to compare products and prices more easily.

It should be noted that consumer confidence in the security of payments made over the Internet has declined this year, after several years of steady growth.

About the survey

The 2011 Xmas survey is Deloitte’s 14th survey of year-end holiday season purchasing intentions among European consumers. This year’s survey covers 18 countries. Over the second and third weeks of September, we questioned a broad representative sample of consumers (consisting of 18,354 respondents) about their frame of mind and planned spending on gifts, extra food for festive meals and out-of-home entertainment and leisure.

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/sk/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 182,000 professionals are committed to becoming the standard of excellence.

© 2011 Deloitte Slovakia