It’s pretty intuitive that in December people are more likely to part with their hard earned cash than in any other month. With turkeys, trees, and tinsel all to be bought, on top of the pressure of buying presents, Christmas can often be a time of spending, not just a time of giving. In the annual “Christmas Retail Monitor”, Retail Ireland takes a look at how much Irish families are expected to spend over the holiday season.
This month will see households spend an average of €2,587, approximately €720 more than any other month during the year. This is a €26 increase on what families spent in December 2015. Overall, Retail Ireland expect an increase of €160m in consumer spending on Christmas compared to last year, with total sales expected to rise from €4.05bn to €4.21bn this year. This represents an increase of 3.7%.
The report outlines a number of factors that have contributed to this increased spending. Employment has been consistently on the rise, reaching 2 million in the third quarter of this year, its highest level since 2008. Along with this, disposable income, or the amount of money people have left over after income taxes have been deducted, has been on the rise since 2010. Both of these factors mean that, overall, consumers have more money to spend.
But the report also notes that retailer prices have been falling. The November Consumer Sentiment Index, which is a measure of how consumers feel about the state of the economy, found that Irish consumers are nervous about the general outlook of the economy and their own personal spending. Consumers aren’t as willing to spend money if they’re worried about the economy, leading retailers to use discounts and promotions to encourage spending. On top of the discounts that already happen around Christmas time, this gives consumers much more purchasing power, and drives their spending.
The recent Brexit referendum in the UK also appears to be benefitting consumers, as prices have fallen every month since the vote. Retailers have to lower prices to keep up with a weakening sterling, as otherwise they risk shoppers travelling north of the border, or turning to e-commerce to do their Christmas shopping. Indeed, online shopping is definitely on the rise, with Irish transactions jumping from €1bn to €1.2bn from July to September.
Although the report has no analysis on the demographics of Christmas shoppers, a “Christmas Consumer Report” compiled by PwC UK does. They surveyed 2000 UK residents to get an idea of how they would be spending their money this Christmas, and found that on average, UK adults expect to spend £280 on Christmas gifts. Perhaps surprisingly, 67% felt that Brexit would have no impact on how much they spend this December, with 17% saying it would have a slight impact, and 8% saying it would have a considerable impact.
There were some pretty big spenders out there, with some 16% of responders expecting to spend over £500, and 27% expecting to spend between £251 and £500. Another 27% expect to spend between £101 and £250, 12% expect to spend between £51 and £100, and just 7% expect to spend under £50. 8% of respondents answered that they didn’t know how much they would spend, and only 4% said they didn’t intend to buy any Christmas gifts. The main reasons given for this were that they didn’t celebrate Christmas (64%), that they had no one to buy gifts for (23%), and that they weren’t able to afford gifts this year (15%).
The report found that women were more likely to spend more money than men, with a mean spend of £292.27 compared to men’s £265.97. By age group, those aged 35-54 were likely to spend the most at £314.09, followed by those aged 55+ at £283.04, and lastly those aged 18-34 expect to spend £234.81.The majority (53%) of the spending is to be made online, with 6% of spending to be done on retailer’s apps for mobiles and tablets.
Effects of retailer’s policies
Nearly half of all respondents (48%) said that nothing retailers could do would encourage them to spend more. However, 28% said they would spend more if retailers reduced their prices earlier, and another 13% said they would spend more if retailers offered deals earlier. This was attitude was especially prevalent among the younger age groups, as only 34% of those aged 18-34 said that there was nothing retailers could do to get them to spend more.
This tied into the fact that 44% of respondents said that they hesitated to purchase some items before Christmas, and 16% said that they hesitate to purchase most items before Christmas, in case the prices were later reduced.
Gender and age both played a factor in this, with 62% of women concerned about pre-Christmas price reductions compared to 56% of men. 67% of those aged 18-34 had these concerns, while only 50% of those aged over 55 did. However, even given this, 57% of respondents said that they would not be encouraged to spend more, even if retailers promised that present prices would not be reduced further before Christmas.
The final thing the report looked at was whether or not shoppers attempted to minimise their post-purchase risk, in case the goods needed to be returned for any reason, with 45% of respondents saying they did not. However 30% did say that they only shop at stores with easy returns policies, and 24% said that they only shop at stores with returns policies of greater than 30 days. Women were slightly more risk averse than men, with 47% of men doing nothing to protect themselves against risk compared to 43% of women.
Overall, these two reports paint a picture of heavy spending over the Christmas season. Although women on average spend more money than men, it appears they are a bit more careful with how they spend it, and although young people don’t spend as much as those aged over 35, they are much more likely to be encouraged to spend money when they see a good deal.