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This Christmas, consumers in the Asia-Pacific region are in the mood to spend, thanks to a strong economy. What are they putting loosening their purse string for? Are they spending more before or after the festive season?

Key Trends

  • Year-end bonuses drive spending;
  • Air travel remains popular;
  • Consumers Down Under in a merry mood.

Commercial Opportunities

  • In the period leading up to Christmas, turn customers into brand advocates. Encourage them to join your loyalty programme and remind them to connect with your brand across social networking sites;
  • Come January, continue to drive sales and clear any excess stock by promoting post-holiday sales, emailing gift-card holders to remind them to use their gift cards and offer personalised emails based on past purchases by suggesting complementary products. In addition, remind customers about deadlines for returning and exchanging gifts.

Background

For what is perceived as a Christian holiday, Christmas surprisingly gets a lot of attention in a continent dominated by Buddhists, Hindus and Muslims. For some countries, it is an after-effect of centuries of Western colonialism and Christian missionary work. For others, the commercial aspects of gift giving and festivities give retailers one of the biggest seasons of the year to encourage consumers to open their wallets. This Christmas, consumers in the region are all about travelling and the convenience of online shopping, with sentiments buoyed by a healthy economy.

Year-End Bonuses Drive Spending

Christmas has come early for families in the Philippines who rely on remittances from relatives working overseas. According to data released by the central bank in mid-October, money sent home rose by 7.4% to US$2.1 billion in August 2013 compared to the same period a year ago. Last year, remittances reached that amount only in December, when transfers hit their annual peak due to holiday spending.

In Malaysia, the year-end sale, which starts in November, is expected to drive spending in the local retail sector. Retail Group Malaysia (RGM) thinks that consumers will be inclined to spend up this Christmas due to the likelihood of employees getting their year-end bonuses this year. A RGM analyst told The Star newspaper: “The recent fuel price hikes are unlikely to have an impact on consumer spending, as the sales promotions and bonuses should mitigate that.”

Real Average Annual Disposable Income per Capita in the Asia-Pacific Region: 2009-2013

Source: Euromonitor International from national statistics

Note: Historical and forecast data based on constant prices and fixed 2012 exchange rates. Data for 2013 is forecast.

Air Travel Remains Popular

Despite the high fares over the Christmas period, Indian consumers are willing to spend on travelling. Noel Swain, executive vice-president of online travel portal Cleartrip.com, told The Times of India newspaper in late October: “The demand for Christmas and New Year has already started building up, with destinations like Bangkok, Singapore and Dubai being the most popular due to their proximity to India.” A travel agent based in Mumbai added: “Many people prefer to travel to international destinations during winter, compared to domestic locations due to the longer break.”

Meanwhile, Japan is likely to be one of the preferred destinations for regional travellers this festive period. In mid 2013, Japan waived visa requirements for tourists from Thailand and Malaysia. Multiple-entry visas were also made available to visitors from the Philippines and Vietnam. The number of foreign tourists to Japan in September surged by 31.7% over the previous year to 867,000, breaking the record for the month, according to the Japan National Tourism Organisation (JNTO). The numbers of visitors from Hong Kong and Thailand came to 55,400 and 29,300, also all-time highs for the reporting month. The JNTO expects this upward trend to continue throughout Christmas and the New Year.

Real Consumer Expenditure on Air Travel in the Asia-Pacific Region: 2009-2014

Source: Euromonitor International from national statistics/Eurostat/UN/OECD

Note:  Historical and forecast data based on constant prices and fixed 2012 exchange rates. Data for 2013 and 2014 is forecast.

Consumers Down Under in a Merry Mood

On the back of low interest rates and positive jobs figures, New Zealanders are looking forward to a Christmas with lower financial stress. Credit reporting agency Dun & Bradstreet says its Consumer Financial Stress Index has been falling continuously since the start of this year. “Throughout the year, there is improved business confidence, jobs growth, house prices and a strengthening currency,” the report said. “Under these positive conditions, consumers have been able to more comfortably meet their credit obligations, pay down their debt and recently, spend money with more confidence.”

Retail sales in Australia are likely to be strong during Christmas as rising share markets and house prices spur consumer spending. According to investment firm AMP Capital, consumers are likely to spend on electronic gadgets, home entertainment and appliances, as well as outdoor leisure and camping gear. “People have been tightening their belts in the pre-election period (in September), but now we see a loosening of belts and a positive, brighter lead up to Christmas,” said Nerida Jenkins, of Australian-based marketing consultant Retail Oasis. Peter Strong, executive director of the Council of Small Business Australia, provided a different perspective: “It used to be that Christmas shopping started in October and went through to December. Now the Christmas shopping doesn’t really get going until December, and many people are waiting till January for the sales.”

Outlook

Consumers are expected to start planning for their next holiday immediately after the Christmas and New Year period. According to travel metasearch site Wego, the majority of travellers in the region begin searching and booking for their next holiday, within one or two weeks of returning from major holiday periods. “Our study of markets in Indonesia, Asia, Australia and India revealed that travel is top of the mind, even more so than prior to major holidays, immediately upon returning to work and regular life,” said Joachim Holte, Wego chief marketing officer, adding that in 2012, following Christmas and New Year in Australia, flight searches were 40% higher than the two month average preceding the holiday season. In early-March this year, when Singaporeans returned after Chinese New Year, flight searches increased by almost 19%. Similarly following Golden Week, celebrated in China and Hong Kong, flight searches went up by 59%.

The World Bank forecasts that money remitted home by overseas Filipinos will reach US$26 billion this year, putting it behind India (with an estimated US$71 billion) and China ($60 billion). This suggests money sent by overseas Filipinos will continue to increase in the last four months of the year, boosting spending over the holiday period.

Online shopping is expected to remain a major force in the region. The recent strengthening of the Australian dollar against the US dollar in the lead-up to Christmas will encourage spending on American sites.

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