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Deloitte

SOUTH WEST IS BOTTOM OF THE CHRISTMAS SPENDING LEAGUE, ACCORDING TO DELOITTE SURVEY

Region‘s Shoppers Also Plan To Spend Least On Presents This Year – But Are Happy To Fork Out On Food And Drink

People in the South West plan to spend less this Christmas than in any other UK region, according to a new survey from business advisory firm Deloitte.

The firm‘s Annual Christmas Retail Survey also reveals that for the second year running, South West spending on presents will be the lowest in the UK.

The overall Christmas spending total forecast for the South West comes in at £642, the lowest of any UK region. The national average is £722, with the figure for Scotland more than £200 above that for the South West, at £848.

The survey also shows that on average, shoppers in the South West expect to spend £312 on purely gifts, just £1 up on last year. This compares with the predicted UK average spend of £385, with Scotland again topping the spending list, at £496.

However, South West shoppers are less “stingy” when it comes to expenditure on food and drink.

There has been another steady increase this year, with a forecast spend in the region of £190, up from £169 last year – the third highest in the UK behind the North East and Scotland, which again heads the spending list at £204. This compares with a national average figure of £178, with Yorkshire revealed as the lowest spending region at £148.

Meanwhile people in Wales plan to spend the least on socialising (£105) with the figure for the South West standing at £140. The national average is slightly higher at £143, with the North West revealed as the most “sociable” region at £178.                                                   

Stuart Woodward, Partner at Deloitte in Bristol, said: “While consumers in the South West are the most cautious when it comes to spending money at Christmas, in particular on presents, we clearly have no such qualms when it comes to purchasing food and drink.

“Crucially, our region is developing a truly first-class retail offer. Drake Circus in Plymouth is now established while shoppers will be able to visit the new Princesshay scheme in Exeter this Christmas.

“Then looking further ahead, Bristol‘s Cabot Circus development will be ready for next Christmas, and SouthGate in Bath the following year, so we may see all of this having a positive effect on consumer spending in our future surveys.”  

Other national survey findings include:

Men vs. Women

After falling behind last year women have now overtaken men when it comes to expected spending on gifts (£394 against £375). But men are still set to outspend women in the food and drink, and socialising stakes.

Planned spending in both categories has risen again this year, with women expecting to spend £153 on food and drink this year, as opposed to £203 among men. Meanwhile women will spend £109 on socialising, with men looking to spend £178 on average.

 

Going Online

Use of the internet for the bulk of Christmas shopping has doubled since 2006 (14 per cent in 2007, versus 7 per cent in 2006). Some 74 per cent of consumers will use online or mail order in some way for their Christmas shopping and two-thirds (66 per cent) of consumers will research or purchase goods online compared to half of the population (51 per cent) last year. 

Stuart Woodward said: “This year, Christmas will go electric as consumers embrace the digital age. More people will shop online this year than ever before as the appeal of cyberspace to avoid the Christmas crush takes hold. High street players are responding to this growing trend. Our research shows a huge growth in the number of retailers providing online stores this year compared to previous years (51 per cent in 2006, versus 72 per cent in 2007).” 

 

Digital Themes

“Further evidence of the move towards all things high-tech can be seen in the type of goods consumers plan to buy,” says Stuart Woodward.

“Video games consoles such as Wii and iPods are leaping up the gift lists. Some 44 per cent of consumers will buy a computer game for friends or family up from 38 per cent in 2006, and 26 per cent expect to purchase an MP3 player this year, up from 20 per cent  in 2006.”

Despite the recent headlines about house prices and bruised financial markets, total spend this Christmas is up 7 per cent on 2006. Consumers expect to spend on average £706 per person compared with £662 in 2006 showing little signs of dented confidence and cutbacks. 

As Christmas goes electric, retailers‘ tills will ring more loudly as technology items tend to be more expensive. In addition to high-tech goods, the expected increased in spend can also be attributed to a strong demand for luxury this Christmas in both gift items and food and drink we will buy.

 

Luxury For All

Stuart Woodward said: “Indulgence is a common theme at Christmas and this year it will be strong. We expect there to be a notable rise in high end, more expensive gifts purchased particularly designer labels. Indeed consumers (17 per cent) plan to buy more luxury items this year and 19 per cent intend to buy a designer handbag or shoes as a gift for friends and family. A further 19 per cent also have designer items on their Xmas wish list and 31 per cent of these are women aged 16-31.” 

According to the research spend on gifts will rise by 2 per cent per person from £378 in 2006, to £385 in 2007, a bigger rise than expected in the wake of recent unrest in the financial markets.

 

How Will The Credit Crunch Impact Consumer Spending?

UK consumers appear to have brushed off economic concerns. When surveyed in mid-September about how much they planned to spend at Christmas, consumers predicted their total Christmas spend would reach £706 per person. 

To gauge the impact of the credit crunch and wider economic fears, consumers were surveyed again in the first week of November on questions relating to spend and confidence in the economy. Consumers provided an almost identical response to their pre-credit crunch estimations of £712 per person. 

Consumer confidence in the UK economy did slip between September and November according to the research, but only marginally. In September 47 per cent of respondents expected the economy to get worse over the next 12 months, in November this had risen only slightly to 50 per cent.

Stuart Woodward commented: “Early indicators suggest concerns about bruised financial markets and consumer confidence are nothing more than concerns. With confidence in the labour market people feel secure in their jobs and the general sentiment is robust. Signs of a housing slowdown could affect consumer sentiment and the credit crunch has made lenders reticent which puts a squeeze on the availability of credit and loans.

“Despite this, there is little evidence of household cutbacks. The impact of the credit squeeze could play out in coming weeks when events have had time to percolate through consumer mindsets, but we think it‘s unlikely. Movements in interest rates or price hikes on petrol now that crude oil prices are at all-time record high, are much more likely to trigger a reluctance to spend, as these have a direct impact on the health of bank balances at the end of the month.”

 

A Nation of Party Goers

The party spirit is back, according to the Deloitte survey. A pick-up in socialising spend is expected following the steep fall (-16 per cent) in 2006. Money spent on going out to pubs, clubs and restaurants over the festive period will rocket to 18 per cent growth per person, from £121 in 2006 to £143 in 2007.

 

Food Shopping Goes Local

Where we will buy food also shows signs of change. Grocery retail will capture the bulk (77 per cent in 2007, compared to 79 per cent in 2006) of Christmas food shopping, but “going local” for food is growing in popularity. Some 29 per cent of consumers, up from 20 per cent in 2006, will head to small independent stores and local farmer‘s markets (16 per cent, up from 9 per cent in 2006) this Christmas to do a proportion of their food shopping over the holiday season.

Stuart Woodward said: “Total expenditure on food and drink is up 9 per cent on 2006.  This is partly driven by consumers trading up and indulging themselves with premium, provenance and fair trade products.” 

“The biggest challenge for retailers is to meet the growing demand for local products.  To have a local offering, retailers need to have all their ducks in a row when it comes to sourcing and suppliers. Those that manage to make it work will be able to tap into a growing trend.”

The Deloitte Christmas Retail Survey is now in its 13th year looks and at the spending habits and moods of consumers and retailers ahead of the Christmas period. 

ENDS             19th November 2007

For further information please contact Neil Fraser, Sturgess Van Damme, on 01275 349011 or email neil@sturgessvandamme.co.uk