Johannesburg - Despite a cooling in optimism toward holiday spending, SA consumers still remain more optimistic about their economy than all the other countries surveyed in the annual Deloitte Year-end Holiday survey and are likely to spend 12% more than in previous years.
However, most European consumers will restrict their 2007 Christmas budget to absorb food and energy price increases.
This year's Deloitte Year-end Holiday survey reveals how consumers perceive the changing environment and how it will impact their shopping attitude: less will be spent on gifts and more on food in order to balance the budget; and more consumers will search for alternatives to imported toys when quality is in question.
South Africans are generally more optimistic than their European counterparts when viewing the economy, note the researchers, while Europeans worry about a weakening of the economy in 2008. Only 28% believe the economy will improve while 41% believe it will deteriorate, so the desire to spend is curbed by limited purchasing power: 53% believe they have less to spend.
In contrast, 52% of SA respondents believe that the economy is in a state of growth while a further 28.9% believe the economy is stable. However 38% of SA shoppers also believe that they will have less to spend than in the previous year.
Festive spending
Healthy economies drive shoppers to spend more during the Christmas season, but the reverse is true as well. Countries in positive economic environments will see consumers increase their Christmas spending.
Consumers from 10 of the 20 countries surveyed said that they would add to their shopping bag compared with last year.
In the 10 other European countries, most of which are undergoing economic difficulties and have a lower growth rate, consumers will spend between -3.6% to +1.4%.
Nevertheless, the tradition of celebrating the holiday season is still deeply rooted in SA and across Europe, and particularly the desire to be with family for more than 80% of those surveyed.
According to the survey, the average growth in holiday spending is expected to be around 3% for Europe with respect to the EMEA (Europe, Middle East and Africa) region overall and 12% for SA.
Consumers in Europe will tend to spend less because of the growing cost of food (54% of the respondents), and energy (34%) as well as lower income levels (44%). As a result, tradeoffs between the amounts spent on gifts will be made in favour of amounts made on food.
For Rodger George, Deloitte Consumer Business industry leader in SA, "shoppers' perceptions of increases in raw material shortages and potential price increases may have been exaggerated to an extent, which will influence their decision on how much to spend this holiday season".
"To avoid an overly conservative approach by consumers when approaching this holiday season, perhaps they need to be better informed as to the prices to be expected at the till?"
Within EMEA, books, clothes and cash are the three most desired gifts to be received for adults and for SA adults, clothes and shoes, CDs and gift vouchers are the most wished-for gifts whilst jewellery and cash are close contenders.
Throughout EMEA and SA, teenagers will receive electronic gifts including MP3, music, DVDs and electronic games. Action figures and play sets (Lego) and Barbie are the two most popular gifts that will be purchased for SA children under 12 years old.
Toxic toys
Concerning imported toys, 52% of all respondents are very sensitive to the lack of quality for products they have heard about. Only 20% of these respondents believe that this was not important. This is to be put in perspective with 66% who are ready to pay more for a gift, provided it is produced under good conditions.
"Shoppers are increasingly reluctant to buy non-ethical toys and more demanding about quality. This year we strongly suggest that retailers and importers be very clear and explicit about the reality of the quality controls they have put in place, advertising these controls on the shelves and specifying the origin of manufacture e.g. SA and Europe.
"This last-minute communication could sway consumers in favour of certain products and help avoid potential gift reductions or change in the gift mix this year," said George.
The internet, which in the past was used as a way of promoting or getting information about products before selling them in the shops, has become a very important channel of distribution in EMEA countries surveyed, occupying fourth place in the EMEA region.
Internet sales
The use of the internet as a retail channel for consumer sales remains low in SA and 41% of local respondents categorically stated they would not use the internet as a shopping channel in any form. Of the remaining 59% who said that they may use the internet to compare stores, products and prices, only 7% indicated that they may actually purchase products on the internet.
Avoiding crowded stores was cited as the main reason for shoppers using the internet for shopping in SA this season.
Fraud and delivery concerns were the top issues raised in last year's survey as the primary concern for SA online shoppers. While still remaining concerns, they have decreased and been replaced by the need for consumers to see and handle products.
Music/CDs and books are the top gifts bought on the internet by South Africans (62%), followed by videos/DVDs (58%) and books (40%).
This Deloitte survey deals with year-end period consumption in 20 countries from the EMEA region. Studies were conducted in parallel, using similar methods, in Scandinavia, in the UK and in the US.
The sample of countries has been widely extended, and Switzerland and Czech Republic have been added. At a global level, the panel includes 32 000 people in the world and among them 17 700 in the EMEA region. The EMEA sample has more than doubled compared with last year (+53%).
The conclusions of the study are based on consumer data collected via the internet (mostly), telephone and face to face.
- I-Net Bridge