Consumers going back to basics for Christmas fare

 

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 (REI) 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 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 and each buy a single present for 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 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. Chief executive David Fitzsimons has warned many retailers will cease trading in 2012. “It’s tough for everyone and we are going to see significant failure in the new year.”

SIX ITEMS THAT ARE SELLING

Turkeys

Pre-ordered items such as the Christmas Day family turkey are “trading well”, but “the trimmings are being ignored”, according to grocery retailers.

Kitchenware

Practical, functional gifts are hot rather than humdrum for 2011, with kitchenware, homewares and textiles all “considered as legitimate Christmas gifts”.

Arts and crafts

Hobbies such as arts and crafts that can be “enjoyed, used and experienced at home” are in demand, as “frivolous gifting” falls out of favour.

iPhone 4s

The “must-have” telecoms gift is the iPhone 4s. But networks won’t know how good a year it has been until they see how many Irish SIM cards are activated on Christmas morning.<

Charm jewellery

Jewellery retailers are reporting lower footfalls than would be typical for this time of year, but as in 2010 demand for cheaper charm products is strong.

Gift cards

Gift card sales are holding up well against the volumes sold last year, after a dip in 2008 and 2009 - however, typical card values have fallen “significantly”

SIX ITEMS THAT REMAIN ON THE SHELVES:

Menswear

Footfall in menswear stores is “erratic”, however “conversion” rates from footfall to sale is “usually good” as the traditional Irish male shuns window shopping.

Winter coats

The clement weather (up until this week) has resulted in steeper than usual discounts on winter ranges, particularly coats, knitwear and boots.

Alcohol

Consumers are checking prices “especially for slabs of beer”, but have not yet committed to significant levels of alcohol-buying for their winter hibernation.

Electrical items

There has been very little “pre-buying” of big-ticket items in the run-up to the flagged increase in VAT in the Budget, as consumers hold off for sale prices instead

Entertainment products

The books, music, games and toys sectors are “bereft of the latest craze or the must-have bestseller this Christmas”, with the lack of hype meaning lower sales.

Crystal

Higher-priced, luxury giftware items such as crystal “continue to decline” as consumers shun showy, decorative gifts and go “back to basics”.