RETAILING: Bleak Xmas Lies Ahead
Recent Western Cape Business News
The eleventh edition of Deloitte’s Year-end Holiday survey has revealed a pessimistic consumer climate within South Africa and Europe for the year end holiday season. The majority of South Africans and Europeans intend to curb their appetite and consume in moderation and with discernment, in the face of a future which is, at best, uncertain.
“2008 can be expected to mark a significant change in end-of-year spending in South Africa. Retailers can expect lower sales levels than in recent years. However, some retailers may still do very well if they can manage to respond to consumer expectations by providing useful, rather than superfluous, products and value for money rather than mere price appeal,” commented Rodger George, Consumer Business Industry Leader for Deloitte South Africa.This year’s survey reveals a pessimistic perception of the economic outlook shared by the majority of countries included in the survey. In 2007, the survey showed a clear distinction between certain countries (Great Britain, South Africa, Ireland, and Spain) with dynamic economies and optimistic, keen consumers and others, such as France and Portugal, whose economies were already faltering and for which the outlook for consumer spending was therefore already rather weak.
“This year’s fall has been all the more brutal and swift for the countries that were still in good shape a year ago. Moreover, the negative perception of the economic environment has continued to worsen in countries such as France, Italy, Spain and Portugal that were already pessimistic last year,” observed George.
57% of South Africans and 60% of Europeans expect the economy to deteriorate in 2009 and to leave them with less purchasing power than last year.
Consumers will remain under the shock of the various economic factors that they have witnessed during the past year.For the first time, this year’s Year-end Holiday survey reveals a majority of respondents intending to maintain control over their spending, with 64% of South Africans and 50% of Europeans intending to budget his or her year-end shopping (as opposed to 34% of South Africans and 33% of Europeans in 2007).
Within this morose climate, 48% of South Africans and 40% of Europeans intend to limit their spending on gifts for the year-end holiday period. However, South Africans intend to keep within their overall spending budget by spending less on gifts but preserving the main part of their extra spending on food for the end-of-year festivities.
“Less spending on gifts probably also means fewer expensive presents, which may have an impact on certain retail segments, such as white goods and luxury items,” he said.
Fewer gifts also mean fewer recipients. South Africans can be expected to be less generous with colleagues, friends or with themselves. Charities may also be penalised. Children, however, will be safe and sound – no sacrifice for them – and will be able to continue to believe in Santa Claus as always!
This year’s star gifts will vary greatly from one country to another, although most countries will retain a preference for books followed closely by clothes, cosmetics and music. South Africans’ preferred gifts will be music followed by gift vouchers and books. The ever larger preference observed for cash or gift vouchers is a sign of the persistent desire of respondents to exercise personal choice or use money to cover their day to day spending.
Electronic toys and consoles represent an ever growing proportion of the gifts offered by adults to children under the age of twelve, followed closely by actions figures and playsets. Teenagers between thirteen and eighteen are expecting MP3 players / iPod’s, music, electronic consoles and games and cash/gift vouchers as gifts.
Given their search for the most competitive price, South African consumers intend to make the bulk of their year-end food purchases at supermarkets 47% (+30%) and hypermarkets 41% (-13%). 76% of South Africans plan to shop for gifts in speciality chains (+8%) this year.
35% of South Africans have indicated that they will buy gifts during sales or other promotional periods leading up to year-end festivities, whilst a further 42% of all South Africans will do their year-end holiday shopping during the year-end festivity period right up until the last minute.
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