Christmas spending to fall 10.6% but overall 2010 spend down just 1%
The annual consumer survey of Christmas spending released by Deloitte has indicated that Christmas spending will be down nearly 11% this year.
19 November 2010
An annual consumer survey of Christmas spending released by Deloitte has indicated that Christmas spending will be down nearly 11% this year spelling another tough Christmas for retailers. However overall consumer spending for 2010 is projected to decline by just 1% according to the Consumer Market Monitior Q3 compiled by the UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland (MII). The 2010 results suggest that consumer spending is finally stabilising considering that the drop in spending in 2009 was 10%.
The monitor which tracks key indicators of confidence and activity in the Irish consumer market, highlights that in 2011 there could be a modest rise in consumer expenditure of 0.4%, however this is dependent on the continual consumer spending trend of late.
Professor of marketing at the UCD Smurfit Business School, Mary Lambkin, told ShelfLife that the reason spending hadn’t recovered faster was due to the Government keeping consumers on “tenderhooks” and “in a state of high anxiety” about the state of the economy and in turn surpressing discretionary spending.
This anxiety is encouraging people to save more than in the past.
“Although consumers are starting to loosen their purse strings there is still some apprehension about the future as they continue to save a lump sum of their earnings each month. However, Q3 figures can be seen as encouraging for the retail sector as we can see that a marginal rise in consumer spending translates to a rise in sales volumes for retail sectors such as department stores, clothing, medical, cosmetics and electrical goods.”
Lambkin said that the grocery market hadn’t felt the same lows as other sectors. “Food and drink is less income elastic. You can’t do without them. The average spending on food was down 5%/6% last year.”
She explained that the monitor which uses quarterly data collected from sources including the Central Statistics Office (CSO), the Central Bank, the European Commission, and various other secondary sources also highlighted that people are becoming more price conscious, thrifty and better money managers with 75% actively looking around for better value and 73% starting to think more carefully about what they buy.
According to the Deloitte survey Irish consumers will spend on average 10.6% less this Christmas. Over 40% said this was due to being in debt. Ireland remains in second place in the European spending table behind Luxembourg, however the average spend has now reduced by over 30% since 2008. The average spend per household in Ireland this Christmas will be €1,020. This is significantly higher than the average European spend of €590.
The survey, which was carried out online in the last two weeks in September with over 600 people, shows that of the average spend per household in Ireland this festive season, €250 will be spent on food, €650 will be spent on gifts and €120 will be spent on socialising. This year Irish consumers advised that they would spend 11% less on gifts, 7.5% less on food and nearly 14% less on socialising than previous years.
Commenting on the figures, Susan Birrell, consumer business partner, Deloitte said: “While the Christmas spend in Ireland is still high compared to many of our European counterparts, Irish consumers are becoming increasingly prudent in their spending patterns. What’s more, with what promises to be a very tough Budget looming in December, Irish consumers are likely to become more cautious in their spending during the festive season.”