Difficult Times Force Consumers to Compromise, but Christmas Spending Should Not Be Down
Bratislava, 8 November 2012 – Slovak households will spend slightly more on Christmas shopping than last year – EUR 522 on average. They will shop prudently so that they can afford as much as possible, with price a key factor. They will focus on buying traditional gifts such as books, cosmetics and clothes. Those are the results of the recent consumer survey of Christmas expectations that was conducted in 18 European countries, plus South Africa. Deloitte’s study is the fifth in a row in Slovakia.
“For the first time since the turning point in 2008, consumers believe that their purchasing power is going down.”
— Peter Horovčák,
Consulting Senior Manager, Deloitte Slovakia
The mood in Europe is bad and the majority of Europeans are uncertain about the future. Nevertheless, the negative attitude towards the economy improved in 2012 (55% of respondents think their country’s economic situation unfavourable, versus 63% in 2011).
Opinions on economic expectations in Europe in the next year differ; however, we are not talking about an improvement, but rather about degrees of pessimism. The economic outlook index in Slovakia is at its lowest for the last five years, which is 10% more than the European average.
“For the first time since the turning point in 2008, consumers believe that their purchasing power is going down. As much as a third of Europeans anticipate having less to spend in 2013, while only 19% said that they feel their purchasing power has gone up,” said Peter Horovčák, Consulting Senior Manager of Deloitte Slovakia.
This feeling of concern is inciting people to think even more before they buy, with price as the deciding factor. This feeling is more intense compared to last year. People are more aware of the debt crisis and European governments’ response of adopting unpopular measures to reduce the public deficit, which affects consumer morale.
For 2013, Europeans indicate that they are prepared to cut spending for two new items: multimedia (subscriptions, Internet, cable TV, telecoms, etc) and day-to-day purchases (lunch, transport, press, etc).
However, there is a big difference between age categories – only 19% of young Slovaks (18-24 years) expect that their purchasing power will go down, compared to half of seniors (45-54 years).
In 2012, European consumers plan to spend, on average, EUR 591 on the year-end holidays, which is only 0.8% less than last year. The Slovaks will be a little better off, together with the Danish and the Dutch, spending EUR 522 on average this year, which is EUR 69 less than the European average. Surprisingly, the Dutch will spend the least (EUR 287) as they perceive Christmas more spiritually, followed by the Polish (EUR 312) and the Ukrainians (EUR 322). Traditionally, the Irish will spend the most as they are the only nation in Europe to come close to the threshold of EUR 1,000 per household (EUR 966).
The trend of buying gifts using credit and loans from family members is replaced by the “broken piggybank” or shopping using cards and cash.
Of course, the main Christmas expense is gifts (the European average is EUR 312; the Slovak average is EUR 314). As people try not to spend less on gifts, they spend less on entertainment (restaurants, pubs), clothes and everyday items. Europeans do not want to tighten their belts and the Christmas tables will remain as full as they were in the past. In Slovakia, we will spend 3% more on food than last year, ie EUR 168, although this is mainly caused by inflation.
“Besides traditional food, European families prioritise children as more than half of year-end holiday spending is allocated to gifts for children with the number of gifts ranging between 3 and 6. In Slovakia, spending on gifts for children amounts to 44% of all expenses, with each child receiving five gifts on average,” explains Ľubica Dumitrescu, Tax Senior Manager of Deloitte.
For several years now, Europeans have expressed a strong interest in purchasing useful gifts. This factor holds even greater sway in 2012. In a number of countries, more than 9 out of 10 consumers expect the usefulness of a gift to play an essential part in their decisions. In Slovakia, there was a 33% growth.
This is confirmed by people’s wishes: cash and books have been the most desired gifts since 2008, with cash taking the lead in 2012. Smartphones and tablets have entered the Top 10, desired by a third of respondents. They are 5 to 6 times more wished for than actually received; in 2011, the ratio was 2:1.
In Slovakia, we wish for books again (more than a half), and the interest in cosmetics (42%) and clothes (a third of Slovaks) has gone down a little.
The desired books are what we will likely find most frequently under our Christmas trees. The purchasing of gifts for children prioritises the educational component, such as board games, jigsaw puzzles and books for young children. For adolescents, as was the case last year, the most widely purchased gifts were video games, cash and books.
The Internet has become more popular as a retail channel for Christmas shopping also in Slovakia, although the importance of cross-channel shopping (a combination of internet and physical stores) has grown, especially in the process of finding and comparing goods and prices.
Consumers can find information on the Internet that they do not have access to in physical stores, such as customer opinions, and they can make their purchases at any time of day or night and compare products and prices.
Women search and compare across channels more than men (45% of women search and 51% of them compare across channels, versus 39% and 46% of men). Nearly a third say they shop only in stores (mostly women), which is more than last year, and nearly a quarter say the internet (mostly men).
As for actually purchasing, only 33% of Europeans will do so online. The main benefit of physical stores is still the possibility of exchanging products, followed by after-sales services and payment security, which once again has become more important this year. Other benefits cited are advice offered by sales personnel and the pleasure of the shopping experience. Therefore, physical stores remain a dominant consumer channel
The 2012 Christmas Survey is the 15th Deloitte’s survey about European consumers’ intentions for the year-end holiday. This year the survey covered 18 countries. Over the second and third weeks of September, we surveyed an extensive representative sample of 18,587 consumers about their feelings and spending intentions with regard to gifts, extra holiday food and outings.
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© 2012 Deloitte Slovakia