Will Irish shoppers spend Christmas this year?

Irish people will spend more than €1.5 billion this Christmas, when the bills for presents, food and partying are totted up, but if you think that’s a splurge, think again. We have in fact tempered our spending dramatically since the height of the boom, and the Republic is one of only a handful of countries in Europe where people say they will spend less this year than last.

Every November for the past 12 years, the tax and business consultancy Deloitte has published a Europe-wide spending survey, and every year bar one it has predicted that Irish consumers will outspend their European counterparts – by almost 400 per cent in some cases. But the sums we plan to spend are telling.

At the height of the boom, Deloitte reported that few Irish households had much change out of €1,400 by the time the tree came down in early January. For the fourth year in a row people have told pollsters they plan to curtail spending; this year the average expenditure is likely to be about €895, a fall of 1.7 per cent compared with last Christmas. Of that, €485 will be spent on gifts, €259 will be spent on food and €151 will be spent on going out.

Irish people will also spend differently this year. The Deloitte survey found that nearly one in four Christmas shoppers plans to buy sale items, and 13 per cent will focus on buying useful gifts rather than simply nice ones. The level of impulse spending is falling dramatically; more than half of those people polled will buy fewer items on impulse.

While a further fall in spending may seem like bad news for retailers, Kevin Sheehan of Deloitte puts an optimistic spin on it. “While Irish consumers will spend marginally less, retailers will be enthused somewhat that the rate of decline in spending has stabilised and is in line with last year,” he says. “That said, retailers will need to remain extremely focused on ensuring that they position themselves appropriately with consumers. The impact of austerity over the last number of years remains to the forefront of Irish consumers’ minds, and the survey results show that this is still having an effect on spending during the festive season.”

Crossing of fingers
Mark Fielding of the Irish Small and Medium Enterprise organisation (ISME) says that his members are cautiously optimistic about what lies ahead. "There is a combined crossing of fingers and toes and legs and whatever else this year," he says. "We are hoping to God that spending will increase a little bit and, while it is early days, it seems as if there has been a little uplift. But we are talking about very small increases."

He criticises the Government for causing uncertainty among consumers over the payment dates for the Local Property Tax, but says the shifting of the Budget from the first week in December to mid-October will have had a positive impact on consumer sentiment.

“The fact that the Budget did not increase taxes will hopefully show people that they have been given a bit of breathing space,” he says.

Shoppers flocked to Clery’s on O’Connell St in Dublin on Thursday when the store re-opened after nearly six months following a calamitous flood last summer. Many of the people there were looking for Christmas bargains. “I haven’t started my Christmas shopping yet but I know that I will be cutting back to the basics,” said George Griffin. “It is still going to be a big deal and I think it is important to enjoy it. But that does not mean we need to go mad. I don’t see the need to spend hundreds of euro on presents that people don’t really want. We have set a €50 limit this year. That should be enough. I have been saving for months for it.”

Kris kindle
Eithne O'Donovan from Ringsend was singing from the same hymn sheet. "I think people still spend – you have to when it is Christmas, but I have stopped buying big presents and we do a Kris Kindle which is great. We allow €50 for a present for one adult. It had got so bad with the presents that people didn't know who had bought what for who and it was a real waste of money.

“We also put €50 into a separate kitty for a charity. Everyone nominates their favourite charity and then we draw a name out of a hat and all the money goes there. The grandkids still get their presents, of course, but it is different for the adults.”

Fielding says that despite almost six years of gloom, Irish people are in no danger of becoming Scrooge-like. “You will never put manners on Irish people when it comes to Christmas. There will always be a feelgood factor associated with this time of year, and people will spend money. You can’t blame people for spending a few shillings around now.”

The managing direct or of Brown Thomas, Stephen Sealy, is not best pleased with the manner in which the property tax situation has been handled by Revenue. “It appeared to me that there would be the benefit of certainty as a result of the early Budget, but the good was cancelled, at least in part, by the inept handling of the Local Property Tax issue. That dented out business in recent weeks but it is still all to play for,” he says.

He says that sales of women’s clothes have been strong in recent days while the new Brown Thomas online shopping service has been performing well. “I suspect that is proving very popular amongst men in particular.”

Wherever they shop, men would be advised to do it soon. The Deloitte survey shows that woman are much more likely to have their shopping done by the end of the first week in December, while men delay. These delays cost money as hassled, panicked shoppers make bad and costly decisions.