The seasonal songs are on full blast, but retailers are not - yet - having a wonderful Christmas time.
A trading statement from industry body Retail Excellence Ireland suggests consumers are opting for a “trimmings-free” celebration in 2011, with functional gifts such as the humble pair of socks coming back into favour and more focused shoppers less likely to be distracted into buying “me-too” presents.
Telephone interviews by REI with more than 300 companies indicate that it is set to be “a December of two halves” for retailers, with a subdued start to trading likely to prompt the onset of pre-Christmas sales in the middle of next week.
Ahead of what REI expects will be a “bloodbath” in the sector in January, retailers are reporting modest purchasing habits that belie Irish shoppers’ reputation as the biggest Christmas spenders in Europe.
“Functional gifts that can be used and worn are in demand. Gifts for show and style are a thing of the past,” REI said.
Food retailers in particular have reported that consumers are buying only “the basic core item and are happy to go without the trimmings”.
Traditional “gifts of yesteryear” that lost popularity during the Celtic Tiger years seem to be making a comeback, retailers have told REI. “Dad can expect a few pairs of socks this Christmas,” the trade group said.
Retailers are also citing the continued growth in the popularity of Kris Kindle as having “an obviously negative impact” on trade. In this gift tradition, families and groups of friends pool their names in a hat and each buy a single present for just one other person in the group.
Consumers appear to be more focused this year, purchasing only what they came into the shop to buy, retailers have reported.
While shoppers are responding to simple rounded price points - €10, €20, €30 - they are less likely than previous seasons to take up “three for two” offers and other promotions designed to increase average transaction values.
With consumer sentiment “at its lowest ebb”, REI expects sales will only marginally beat last year.
Shop tills were busier in early December than they were in the same period last year, when snow and ice forced consumers to postpone their gift-buying. However, the period since December 8th has seen trading fall below levels seen in 2010, when a temporary respite from the snow allowed consumers to start shopping.
This year’s Christmas rush will begin in earnest today, REI predicts, with many shoppers having their bank balances boosted by a mid-month pay packet. Credit cards are more likely to stay put in consumers’ wallets, REI said, with cash and debit cards the preferred payment methods for 2011.
REI chief executive David FitzSimons has warned that many retailers will cease trading in 2012.
“It’s tough for everyone and we are going to see significant failure in the new year.”
