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Christmas is becoming less of a one or two-day celebration than a spiritual feeling that boosts consumption for more than two months a year. This year, trademark gifts (toys and clothing) will remain at the top of shopping lists, while traditional sales channels will reclaim some ground lost to discounters. There will be two non-classic trends: more online sales and Christmas arriving ahead of schedule. Many consumers are tired of bad news and are seeking refuge in Christmas.

Commercial opportunities

  • Christmas is becoming less of a one or two-day celebration than a spiritual feeling that boosts consumption for more than two months a year. Firms such as Apple and airlines are already making the most out of “bringing Christmas forward”
  • Do not hesitate to recreate a traditional Christmas – the best way to innovate is to take classics into account and present them in new places and ways
  • In the USA and Canada, many people have become tired of having to save up and now devote time to looking for good prices outside discounters. The internet’s shopping possibilities are still promising with internet retailing growing
  • Thousands of families may now access seasonal shopping for the first time. Countries such as Peru and Brazil have seen rapid growth in their consumption of decorative products, for instance.

Background

The Christmas season is the most anticipated time of year among shop owners around the globe. In North America, holiday shopping begins after Thanksgiving weekend; this year, things began a little earlier. In Mexico and other Caribbean countries, it takes place after the Day of the Dead (on the 1st and 2nd of November), while in the rest of Latin America (where these holidays are not observed) things begin a little later, by late November. Throughout the Americas, the importance of consumption during these celebrations depends on socioeconomic level: in Latin American countries with less purchasing power such as Paraguay, spending on Christmas presents like toys accounts for up to 70% of the total annual spending on such products for a family. Thus Christmas is one of the most important holidays in a large majority of Latin American countries.

While according to the IMF the economies of almost all Latin American nations are growing at rates of between 2-9%, Canada and the USA are in a different situation. According to an autumn survey from The NPD Group, a market research company, the majority of American consumers say they plan to spend “the same” amount of money on holiday gifts as in 2010 – (64% versus 61%), with just 9% of respondents asserting that they plan to “spend more.” This traditional survey called The NPD Holiday Survey of Consumer Purchase Intentions was conducted online between the 6th and 16th of September with 3,681 respondents. On the other hand, in countries such as Brazil, Argentina, Peru and Colombia, this Christmas is expected to be the best in years, due to economic growth and the new access of more families to the consumption of entertainment goods.

Santa arrives earlier

“I’ve got it! I already have my Christmas present!” said a 25-year-old New Yorker interviewed on American TV on the first day of the launch of the iPhone 4Gs – October the 7th! It was another sign of a new trend; this year, Christmas has started much earlier for consumers and companies. Apple sold a record four million iPhones 4S in just 48 hours – with 600,000 pre-orders one week before launching. This is just an example of how Christmas, due to both consumer desire and initiatives from firms, has been brought forward in the Americas. Peter Moore, one of the top executives of video game creators Electronic Arts (EA), claimed that early Christmas will be an acid test for the new youth-oriented portable console Nintendo 3DS, for which EA has specifically developed games. In Florida, the emblematic amusement parks SeaWorld Orlando and Busch Gardens Tampa Bay have brought forward their December classics by one month. Christmas characters, carols, impressive flowers, festive decoration and typical music were already present at the park as early as October, the local media observed.

Christmas arrived earlier in Latin America as well. Countries such as Mexico, Brazil, Chile and Argentina have seen Christmas-related promotions since August. The firms’ tacit advice is to “buy earlier, buy better.” For example, many travel agencies launched promotions for Holiday trips in August and September, getting round decisions by Delta Airlines and United Continental Holdings to raise their fares by the end of September. In Mexico, a survey published in Excelsior, a newspaper, showed that Christmas trees, snowmen, spheres and shelves with toys have already been present in supermarkets and department stores since early October, and overlapped with the Day of the Dead, celebrated at the start of November. According to the paper, in 2008, the crisis forced some shops to bring special decorations forward, in order to boost shopping in hard times. “Now it’s become massive, everyone does that,” it added. However, some consumers do not see things this way. “I am appalled to see everything ready for Christmas. What are shops looking for? I feel the year goes by faster,” thinks Francisco Hernández, a family man.

Consumer Spending Intentions for Christmas in the United States: 2010 & 2011

ScreenHunter_02 Nov. 23 13.25

Source: The NPD Group/Annual Holiday Survey 2011Note: The survey was conducted from September the 6th to September the 16th 2011 and published in October 2011

Back to tradition

Justin Bieber’s perception of Christmas as marked by its most traditional elements mirrors that of most people. According to NPD’s survey, but also to others conducted by several media and consultancies throughout several Latin American countries such as Globo from Brazil and Ipsos, there will not be much innovation in terms of presents. Clothing and toys will lead sales lists throughout the Americas by a long stretch. Seven in ten families will give these items as presents.

North and Latin America have different tastes regarding electronics. In the former, NPD claims fewer videogames will be sold (purchase intention dropped from 15% to 13% since 2010) as well as fewer consumer electronics items (down from 16% to 15%), whereas in almost all of the latter, sales of these products will increase due to the rise in purchasing power. There is a common trend in both regions though: a drop in sales of cultural products such as books, music and movies/DVDs.

Tired of saving up

Several surveys have revealed that many North American families are tired of saving up for Christmas, at least in traditional ways. One of these methods is to go to discount stores. “Save money, save money, save money… doesn’t always mean living better!” explains a mother of three living in Miami. She referred to Wal-Mart’s slogan “Save money, live better”, believing that “while it’s right in most cases, it doesn’t always apply, because it is very tiresome to buy the same in the same place, saving up is very tiring.”

The NPD Holiday Survey has warned about this phenomenon. The question “Where Consumers Plan to Shop for Holiday 2011” registered a sharp drop in discount stores in just a year. Shops such as K-Mart, Target and Wal-Mart fell from 54% in 2010 to 51% in 2011. On the other hand, Online (35% to 38%), department stores such as Macy’s, Bloomingdale’s (22% to 24%) and catalogues/nail order (12% to 14%) went up. “Discounters are likely to be the most challenged retailers. They remain steadfast in trying to hang on to consumers that found them when it was all about lower prices,” said Marshal Cohen, NPD’s chief industry analyst, “but now that consumers are looking for value and also willing to pay a little more, so we are seeing the discounters have a hard time hanging on to those consumers. That means that they will have to work very aggressively to lure shoppers in early and often with sales and name brands for less.”

First Christmas

The cautious attitude to spending seen in some sectors from the USA and Canada provides a stark contrast to what is going on in countries such as Peru. There, according to portal Peru21, shop owners have estimated a 25-30% growth in sales for this Christmas, due to the fact that thousands of families will now be able to go shopping for presents. “This time we will see a larger number of households which rose from low to mid-income thanks to an increased purchasing power go shopping, many of them for the first time,” said Gonzalo Ansola, head of the Association of Commercial Centres. He meant access to shopping centres, for in the past poor families only shopped at street stands or retailers. That is why “decorative items” will be sold the most, while “clothing and electronics” will be the most demanded gifts. This trend has been seen in other countries such as Brazil, especially on the mainland, where many lower-class families can now afford to give each other presents – a former luxury.

Outlook

“Enough with bad news already, we are not doing that bad!” This could be heard in a focus group in Argentina conducted in September by specialist consultancy CCR. Many other people think the same way in that country as well as other Latin American nations, with consumers “tired of bad news” about the world’s economic downturn; this leads them to “seek refuge” – and there’s no better time to do this than Christmas!

 

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