This Christmas, consumers in different parts of the Asia-Pacific region are not sharing the same level of optimism. While some are likely to spend big on properties and online shopping, there are many who are facing the reality of an economy that is losing steam.
- Spending curbed by the declining dollar;
- Facing the reality post-celebration;
- Buying a better life for the family;
- Who needs Christmas in order to go shopping?
Single’s Day, which falls on November the 11th, is a major cross-border retail opportunity. More than 200 overseas merchants from over 20 countries have already confirmed that they will be participating in this year’s event;
Despite being observed for its true religious significance in only a handful of the countries in the Asia-Pacific, Christmas is one of the most celebrated festivals for consumers across the region. Immediately after Halloween, shopping malls and hotels in the region are dressed up in elaborate Christmas decorations. Many people also tend to travel over the festive period, buoyed by year-end bonuses and days off work.
While Christmas in the Asia-Pacific in 2013 was boosted by a strong economy, this year may be different. In Hong Kong, where Christmas is traditionally synonymous with big spending by locals and tourists, particularly those from Mainland China, rising political unrest is hurting the retailer sector. In Australia and New Zealand, two of the main countries in the region where Christmas is celebrated in a big way, a weakening economy is discouraging many from loosening their purse strings.
Source: Euromonitor International Analyst Pulse, September 2014
Note: The original question was “Thinking about your upcoming shopping plans for this holiday season, how will your spending this year compare to your spending last year?”
Spending curbed by the declining dollar
All signs are pointing to a bleak Christmas in Australia this year. According to Sydney-based Morgan Stanley analyst Malcolm Wood, Christmas trade will “struggle to be better” than 2013 amid the slowing economy, and lower petrol prices were about the only factor helping to improve consumer sentiment. More Australians are also expected to forgo their year-end overseas trips. Major currencies in the region such as the Singapore dollar, Malaysian ringgit, Chinese yuan, Japanese yen and Thai baht have all strengthened against the Australian dollar in the third quarter of 2014. Anthony Hayes from tour operator AAT Kings says the company had already seen a direct rise in bookings for domestic day tours and short breaks. “As the dollar softens, more and more guests are delaying their overseas holidays and choosing to do one or more shorter domestic trips”, Hayes said to The Herald Sun newspaper. “Australians are very switched on when it comes to stretching their money further”, he added.
Facing the reality post-celebration
The tendency to use credit cards to cover the extra spending during Christmas leads to financial stress for many come the New Year. “We see a surge in clients in January and February and it’s predominantly because of Christmas expenses and expenses that they didn’t plan for”, Tammy May, director of financial planning firm My Budget, told Australian Associated Press. “Avoid the expensive traps that come with chaotic and last minute spending sprees” May added. According to Euromonitor’s September Analyst Pulse survey on holidays shopping habits, 38% of respondents in the Asia-Pacific revealed they tend to “wait till the last minute” to do their holiday shopping, compared to 31% in Europe and 21% in the Americas.
Buying a better life for the family
With over 80% of Filipinos defining themselves as Catholic (as reported by the BBC in May 2014), it comes as a surprise that Christmas is the biggest holiday of the year in the Philippines. For some overseas Filipinos, festive shopping means more than just fashion and food – it means properties. Property analysts are unanimous in saying that a buying trend is most likely to be played out, according to an article published in October by the Philippines Inquirer newspaper. Claro dG. Cordero Jr., head of research at Jones Lang LaSalle Philippines, said the increased spending is expected as remittances from overseas Filipinos traditionally peak during the last quarter of the year. Property purchases, especially of residential developments, follow suit during this period. Taking care of the family is the top priority for many overseas Filipinos who venture to foreign land for better employment opportunities. Enrique Soriano, director for real estate at Wong+Bernstein Business, observed: “It is important to note that overseas Filipinos account for a third of residential purchases, effectively making the Philippines a remittance economy”.
Who needs Christmas in order to go shopping?
Since the 1990s, November the 11th has been designated as Singles’ Day in China because “11/11” looks like four single people. As of 2012, however, Singles Day is known more for being a major online shopping holiday, eclipsing even Black Friday and Cyber Monday, two of the biggest shopping events in the USA. Created by e-commerce giant Alibaba, the Single’s Day shopping event is a 24-hour period of online sales. As Single’s Day was meant to be an anti-Valentine’s Day festival, many people use this day to buy things for themselves. Also, if last year’s success is any indication, it is clear that Chinese consumers, single or not, do not wait until December to splurge. Bloomberg reported that in 2013, Black Friday and Cyber Monday online spending reached a record US$1.2 billion and US $2.29 billion, respectively. However, they pale in comparison to the 2013 Single’s Day spending over Alibaba platforms, which topped US$5.75 billion in this 24-hour period. According to Euromonitor International data, internet retailing in China will grow by 34.5% to US$817 billion in 2014.
Source: Euromonitor International Analyst Pulse, September 2014
Note: The original question was “Do you plan to buy any gifts or treats for yourself this holiday season?”
If the bleak retail figures over October’s Golden Week holidays in Hong Kong are anything to go by, analysts believe that mainland Chinese tourists will be looking to spend their money elsewhere this year end. At Singapore’s Marina Bay Sands mall, a shop assistant at Burberry told Reuters that the majority of customers have been Mainland Chinese since the political protests in Hong Kong erupted in September. In Tokyo, department store chain Isetan reported nearly three times more Chinese visitors than a year ago. In Sydney, luxury labels like Gucci, Hermes and Miu Miu all reported a pick-up in Chinese visitors in recent weeks.