EVEN though shop owners are hoping for a better Christmas sales season than last year, surveys indicate that Slovaks want to reduce their Christmas spending in 2010. While they plan to lay their Christmas table as richly as in the past, they expect to curb their outlays on Christmas presents and entertainment. Slovaks are also beginning to go online to find Christmas bargains or are using retailers’ loyalty schemes to help save money. Even though macroeconomic figures indicate an improvement in the country’s economy, Slovaks say they are less inclined to take out loans to cover their Christmas expenses this year than in the past.
The Deloitte 2010 survey on year-end holiday season purchasing intentions indicates that Slovak households plan to spend €435 on Christmas presents, food and other holiday-related purchases and entertainment this year. This is close to the average in the Czech Republic, where households intend to spend €495, but below the European average of €590.
“Following the 2008 crisis, almost half of Slovak consumers still believe their country is in a recession, while 40 percent of Slovaks believe the economy will recover in the following year,” Deloitte Slovakia wrote in a press release accompanying the survey results. “This belief ranks Slovakia among the more optimistic of European consumers, in comparison for example to Portugal or Greece where the feeling is not surprisingly to the contrary and reflects the present situation in each of those two countries.”
Slovak households plan to cut their Christmas spending by 10 percent compared with the previous year, the ČTK newswire wrote, citing Zuzana Letková, audit partner at Deloitte Slovakia. Slovaks want to reduce their spending on presents and entertainment but they do not plan to save on Christmas meals and celebrations.
Slovakia is not the only European country in which households plan to cut their Christmas spending. The Deloitte survey covered 19 countries and reported that households in numerous European countries, including Greece, Ireland, France and Portugal, are also planning spending reductions. The survey targeted a broad representative sample of consumers and covered 20,655 respondents who over the last two weeks of September were asked about their frame of mind and intentions regarding spending on gifts, extra food for holiday meals, and out-of-home entertainment and leisure.
Jozef Orgonáš, the secretary general of the Slovak Association of Commerce and Tourism (ZOCR), and Ľubomír Drahovský, a market analyst with the Terno market survey agency, view the Deloitte survey results as realistic but Drahovský remarked that it would be interesting to do a similar survey after the Christmas season.
“I do not expect any significant changes in Christmas spending this year compared with 2009,” Drahovský told The Slovak Spectator. “People will prefer useful presents and smaller items.”
“This year’s Christmas season will be very similar to that in 2009,” said Drahovský. “This means that people will not be too profligate and will prefer saving money for a richer Christmas table and celebrations of New Year and invest less in Christmas presents.”
Orgonáš expects a normal Christmas season, with a moderate increase in total turnover, especially in economically stronger regions. But in spite of this expected growth compared to last year Orgonáš assumes that the general level of sales will still be below that of the pre-crisis period.
“The Slovak customer does not economise on Christmas and thus he affords everything that he is accustomed to,” Orgonáš told The Slovak Spectator, adding that stores have already registered an increased demand for more expensive products of a better quality.
Drahovský does not see any indication of relaxation of economic concerns by people in spite of decreasing unemployment and a moderate increase in wages. But he does point out that a large group of people, pensioners, will get Christmas bonuses that total €60 million and if this is spent it may significantly improve sales of retailers and service providers. Nevertheless, Drahovský expects pensioners will likely use this money to ‘survive’, using it to cover their routine expenses or putting it aside as a reserve.
Drahovský said it is a positive trend that Slovaks are less inclined to take out Christmas loans and deepen their aggregate indebtedness.
The Deloitte survey confirmed this reluctance to take out loans to finance Christmas expenditures. Letková noted that consumers are less interested in financing purchases via loans and that they plan to finance their Christmas spending from normal income and savings, adding that consumers are also using various retailers’ loyalty schemes more often and shopping online to save money.
Drahovský expects merchants will generally order lower quantities of goods so that they do not need to sell them at steep discounts after the end of the Christmas season, stating that he thinks post-Christmas sales might not be as deep or as lucrative as in previous years.
Orgonáš confirmed that a trend has emerged in the last few years when some people delay their Christmas shopping until after Christmas.
“Yes, this is a new trend which came to Slovakia from western countries,” Orgonáš told The Slovak Spectator. “The idea is that after Christmas it is possible to buy much more for the same amount of money. In the US this is called ‘the run’. Sales start as early as December 26 and people thus get presents even during the Christmas period.”
Drahovský warned, however, that in Slovakia shops often put on sale only goods of non-standard sizes and that the offer is generally narrower.
Christmas selling starts
The biggest shops in Slovakia have already started their Christmas promotion activities but the Pravda daily wrote that compared to previous years the assortment on offer will be narrower, noting that last year merchants offered 10 different kinds of MP3 players or TVs and that this year the number will be reduced.
The daily wrote that retailers fear that after Christmas they will have shelves full of unsold products and this is curbing merchants’ inclination to order more and that stores are also reducing their plans to lure customers with large pre-Christmas sales.
The Nay chain, which primarily sells household appliances, expects that the growth that it has seen in the retail market beginning in the third quarter of 2010 will continue into the Christmas season.
“The development indicates that the Christmas season should be stronger than last year,” František Vámoši, the head of the marketing department at Nay, told The Slovak Spectator. He added that in 2009 Slovak customers were more careful and pragmatic due to the crisis.
Expectations regarding the types of Christmas gifts that Slovaks will buy are similar to previous years. Slovaks traditionally find books, perfumes or other cosmetic products, music, films, notebook computers, TVs, and cameras under their Christmas trees. According to Vámoši, Nay will be offering the first 3D video recorders in selected stores. Other traditional presents include video game consoles and MP3 players but Slovaks also buy ‘useful’ presents which include washing machines, vacuum cleaners and coffee machines as well as clothing and footwear.
“We should hope that in the future people will buy ordinary things they need for their lives during the year and for Christmas they will buy books, music, and small presents to give pleasure to their friends and family members,” Drahovský said.
