Curbed Christmas anticipation
Deloitte X-Mas Survey 2011: Consumers want to save and enjoy
The current X-Mas Survey by Deloitte, which surveyed around 1700 consumers in Germany and more than 16.000 consumers in 17 other EMEA countries, shows: Unlike in the rest of Europe, Germans are comparatively optimistic about their personal economic development.
1. Declining European consumer confidence
The debt crisis in Europe, combined with the constant downward revision of growth forecasts, has significantly dampened many's hope for a better future.
As a result, more than six out of ten European consumers believe their country is currently in recession. Although some countries such as Greece, Portugal, Italy, Spain and France are more severely affected by the generally felt recession than others, this impression can be observed in all countries surveyed. However, the concerns are less pronounced than in the record year of 2008, when seven out of ten European consumers expected a recession. Analysis of our survey results shows that only German consumers are more confident: 53% believe their country's economy is stable or growing faster.
Nonetheless, consumers admit that the 'crisis' has not yet had an impact on their attitude towards spending power. 60% of respondents believe that their purchasing power has remained the same or even increased. In most European countries and where the debt crisis has hit particularly hard, the announced austerity measures and tax increases will not affect household budgets until next year.
The 2011 holiday season is therefore the last opportunity for consumers to enjoy themselves, and rightly so given the difficult times ahead in 2012.
The results of this year's survey show that the economic situation in 2012 is what worries Europeans the most. This is in contrast to the results of all previous surveys, which always showed an optimistic view of the future. While one in four Europeans surveyed in 2010 expects the economy to recover in the following year, only one in ten thinks so this year. Unsurprisingly, concern is greatest among Greeks, Italians, Portuguese and French.
However, this concern also has a strong impact on the other countries surveyed, especially where consumers were more confident in a possible economic recovery last year, such as Slovakia, Finland, Switzerland, the Netherlands, Germany and Luxembourg.
Changing perceptions are making European consumers more careful with their money. Cautious but not paralyzed as the desire to enjoy the holiday season remains strong and consumers currently assess their purchasing power as stable overall. Cautious but undecided as consumers are likely to adjust their buying behavior given the negative developments during the 'crisis' across Europe.
2. Christmas budget 2011 remains stable
In 2011, European consumers plan to spend an average of EUR 587 on the year-end holidays, only 0,8% less than in 2010.
As in the past, consumers will primarily try to save on gifts, since these make up the bulk of the budget. Spending on holiday meals, entertainment and excursions remains constant.
There are still differences between the individual European countries. Three main groups emerge:
• Countries that have recorded a significant decrease in their Christmas budgets for the second year in a row: Greece (-21%), Ireland (-7,4%), Portugal (-7,9%), Italy (-2,3%) and the Netherlands (-2,9%).
• Countries where a slight increase in the Christmas budget can be observed: Switzerland (+0,3%), Luxembourg (+0,8%), France (+1,9%), Spain (+1,9%) and Belgium (+2,2%).
• And finally, countries where the Christmas budget is growing relatively strongly: the Czech Republic (+2,5%), Poland (+4,1%), Germany (4,3%), Slovakia (+6,6%) and Finland (+6,8%). The countries that again record a steep increase are Russia (+11%), Ukraine (+18,3%) and, since this year, South Africa (12,4%).
• In some countries, however, this overall positive outlook should be seen in the context of runaway inflation.
Overall, European consumers are extremely unlikely to take out a loan for their Christmas shopping. Instead, they draw on their savings, but also on loyalty points.
Concerns about the economic situation remain high and could lead to a reduction in Christmas spending. In particular, the crisis in Europe (for 61% of respondents) or the growing fear of unemployment (20%) could favor such negative developments.
At the same time, there is a possibility that consumers will spend more to have fun and forget the crisis (39%). In this regard, they are spurred on by the attractive end-of-year sale (30%), especially since finding the lowest prices is important for consumers who want to spend their money wisely and make the most of their budget.
However, 30% of European consumers are still undecided and do not rule out the possibility of taking out a loan with an attractive interest rate to finance their Christmas 2011 expenses. This factor could boost holiday spending from Europeans, who have generally been keen to lower their debt burdens over the past two years.
3. In Europe, the choice of gifts is primarily based on personal well-being
This year, for the first time, our survey shows a convergence between the most wanted gifts and the most bought gifts:
• Books and cash are the most sought after and tend to be the most purchased. Apart from the fact that this category has always been in first place since 2008, the ranking is the same for all countries and age groups surveyed.
• Similarly, cosmetics/perfumes are the most popular gifts, followed by chocolate, as last year. Regularly appearing in the top 10 gifts and often considered an extra gift, chocolate climbed to second place in the European ranking this year.
Demand for beauty care products and related services is increasing across Europe.
Next to the popular cosmetics/perfumes, the category for beauty care products/massage/spa ranks third for the best-selling gifts. This wellness trend is also reflected in consumers' desire to do something good for themselves.
In a difficult economic context, consumers are looking for the best product with the highest quality, but at the lowest possible price.
This trend is also reflected in the preference for toys with an educational component (64% of European consumers). These include board games, puzzles and books for small children. Many parents believe that by encouraging their children to learn, they can prepare them for an uncertain future.
The most popular gifts for young people are video games, cash and books, with the latter being given away in most of the countries surveyed.
After a few years of steady growth, gift vouchers are still very popular.
Despite still being among the top 10 most-bought gifts, European consumers have criticized restrictions on the use of vouchers this year. In particular, they complain that the period of validity is often too short or that the shops and products chosen do not meet their needs. In other words, vouchers don't seem to give them as much freedom as gifts of money.
Innovative products such as tablet PCs, 3D TVs and smartphones have not yet made the top 10 most sought-after or popular gifts as they are still costly despite falling prices. However, the proportion of those who want to give such products as gifts doubled in 2011, which can be attributed in particular to a high proportion among the younger respondents.
4. Buying behavior
The difficult economic context of the last three years has led European consumers to change their purchasing behavior and to compromise on the Christmas budget. While such behaviors and compromises are also likely to be part of the equation this year, there will likely be some shifts in this trend.
Just like last year, the key factors in purchasing decisions in the 2011 Christmas season are choosing useful products at the best possible price.
As in 2010, usefulness is a priority for 79% of European consumers. For 70% of European consumers, price is still a priority, although the desire to have fun and the attractiveness of high-quality products also play a role:
• Even though consumers continue to look for gifts during sales, sales have fallen from 69% to 65%, while demand for inexpensive gifts has also fallen (from 63% to 57%).
• Consumers are also likely to purchase more gifts, with 53% saying they would like to give gifts to more people.
This development will encourage consumers to buy more wisely, in particular by reducing impulse purchases even more (69% of consumers, compared to 63% last year).
As a result, retailers need to better inform consumers about the functional benefits of the products, in addition to the price.
To spend their money more wisely and efficiently, some consumers will pool for gifts (34%) or buy second-hand goods. However, these tendencies are less pronounced among this year's respondents and mainly affect younger people.
In recent years, national brands have lost a large number of customers who want to save money and are less interested in the advantages of certain products, to private label and private labels. A reorientation towards national brands can be observed this year.
As a result, 55% of European consumers plan to buy mainly private label and private label products, compared to 64% last year.
This rebalancing is particularly evident in Western European countries. Surprisingly, this is mostly attributable to the less affluent demographic (52%, compared to 62% last year), while those in the highest income bracket are least likely to choose national brands (37%, compared to 51% last year).
European consumers are once again cutting corners for the Christmas holidays this year, spending less on entertainment and outings (39%), travel (36%) and clothing (32%). It is likely that there will be more savings in other budget items mentioned in the survey this year and next:
• European consumers are currently considering spending less on education (tutoring, private schools, etc.). 25% want to save in this area. This new trend is expected to continue next year: 44% of Europeans say they would be willing to save on this item, while 22% are still undecided.
• 75% of European consumers are also willing to spend less money on household items in the coming year.
• There could also be compromises, albeit to a lesser extent, in health care. For example, 24% of European consumers are considering reducing their spending on private doctors.
Finally, European consumers continue to express an interest in protecting the environment without paying more for sustainable products. However, it should be noted that consumers are now showing greater interest in the quality of information on product labels: 82% emphasize this factor, compared to just 2010% in 73.
5. The cross-channel concept has already caught on with European consumers
Previous surveys have shown that the importance of the Internet as a sales channel for Christmas shopping is increasing.
European consumers have moved beyond the simple distinction between online and offline sales channels and use both channels for all three steps of the buying process: search, compare and buy.
More than half of European consumers are already searching and comparing products both in-store and online. Ultimately, one in three consumers plans to use both online and offline channels this year to purchase the products or gifts they want.
To search for and compare products on the Internet, consumers will turn primarily to retailers' websites, followed by search engines and finally to manufacturers' websites, which this year have seen significant growth at the expense of price comparison websites. The increasing use of retailers' and manufacturers' websites shows that consumers appreciate their efforts and investments in e-commerce. Social networks and, to a lesser extent, blogs are the least utilized resources.
Consumers use social media and blogs to get independent information about brands and retailers, but only give their opinion there about half the time. This does not apply to Spain, France, Poland and Slovakia, where consumers primarily express their own opinions on such sites.
The vast majority of European consumers intend to complete their purchases in-store. The only exceptions are German, Greek, Polish and Czech consumers. Consumers there state that they are already used to completing their purchases either via the Internet or in stores.
Consumer acceptance of the cross-channel concept has increased significantly as it allows them to better meet their needs by maximizing the respective advantages of in-store and online shopping.
• They can use the Internet to find information they can't get in-store, such as what other consumers think, and shop any time of the day or night, and easily compare products and prices.
• On the other hand, they go to stores for customer service, payment security, shopping pleasure, or because the purchases can easily be returned or exchanged there. For this reason, consumers appreciate, for example, being able to return, exchange or receive a refund for products purchased via a website in a shop or to be able to pay for an order placed online at the retailer's shop.
It should be noted that consumer confidence in the security of online payments has fallen this year for the first time after several years of steady growth.
European consumers are not yet benefiting from mobile commerce solutions, in other words, from being able to make purchases using their smartphones.
Not even one in five of the consumers we surveyed has already made use of this option. However, the popularity of this distribution channel could double in the future, particularly among young people and particularly in Ireland and Eastern and Southern Europe.
Retailers who succeed in implementing a customer-centric cross-channel strategy will gain a decisive competitive advantage.
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Source: Düsseldorf / Munich [Deloitte]
