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Of the countless festivals and events celebrated in the Asia-Pacific region, Christmas is one of the most elaborate. Religious connotations aside, it is traditionally a time to indulge with fine food and big spending. This year, however, the festive mood is somewhat tainted by a bleak economic outlook. How are consumers affected? Are they wiser after the last global financial crisis?
With less than six weeks to go until Christmas, consumers in Australia are being urged to prepare for one of the most financially demanding periods of the year. “Uncertainty surrounding interest rates and soaring energy and grocery prices mean Christmas is a time when families are likely to underestimate the financial burden,” said chief financial officer Wayne Matters of Community CPS, a major credit union in the country. “The last thing we want people to do is start 2012 with financial difficulties, so we’re advising people to start their planning now,” he added. 35-year old mother-of-two Katrina Pottage, from Melbourne, says she has used a Christmas Club account since she was in her late teens. She uses the A$1,000 (US$1,000) she saves each year to buy presents for children and extended family.
In New Zealand Christmas could also be a tight one this year with personal debt stopping many shoppers from being able to save. A survey of consumer credit expectations conducted in September by credit reporting and debt collection firm Dun & Bradstreet found that only 9% of consumers intended to apply for a credit limit increase to pay for Christmas expenditure. For some, however, Christmas indulgence is the least of their worries compared to the realities of life. Leonora Houma, who moved to New Zealand from the Solomon Islands in January, said her first focus was on finding a job. “I haven’t really thought about Christmas. I am just really trying to get a job.”
With Australian consumers keeping a firm grip on their purses and saving at record levels, business advocates have warned that a flat Christmas will bring business failures in the New Year. “A lot of shops do a third of their sales at Christmas, and it’s not going to happen this year” said Peter Strong, chief executive of the Council of Small Business Organisations.” In line with that prediction, jobseekers hunting for well paid casual work during the festive period will be in for a tough time. “We’ll see an issue as retailers won’t be employing these people, typically university students and the like. The first issue is that retailers are going to lose these people as consumers because they are the type of people who tend to earn their money and spend it back into the retail economy,” Australian Retailers Association director Russell Zimmerman said.
Christmas in Japan has morphed into a romantic extravaganza marked by expensive dates and gift exchanges between young couples. Many consumers take this time to forget about all the worrisome things in life. Elderly couples tend to splurge on expensive tickets costing up to US$500 for dinner shows hosted by major hotels featuring celebrities, to join in the countdown on Christmas Eve.
In recent years, thanks to the marketing prowess of Kentucky Fried Chicken, the Christmas Chicken Dinner has become very popular. Many Japanese even make reservations for their “KFC Christmas Chicken” ahead of time with customers lining up at KFC outlets across Japan to pick up their orders. Hand-held game consoles are touted as the most sought-after gifts in the country this year with the release of the Ice White Nintendo 3DS, and the Playstation Vita, Sony’s anticipated successor to the PSP. Addressing the latter’s price tag of 29,980 yens (US$390) for the 3G model, Hiroshi Kawano, president of Sony Computer Entertainment, said that the price of the Vita will not drop to meet consumer demand, despite Nintendo’s recent price drop for the 3DS in order to increase unit sales.
In recent years, there has been an increased focus on Christmas in China, particularly among young people who regard it as an important and fashionable day to celebrate, despite only a small portion of the population being practicing Christians. “We simply just want to have some fun on this day,” explains 20-something Sai Wang, who works for an IT company in Beijing. “Western holidays are more trendy for young people. There is no other deep reason at all,” he adds. Christmas Day is not legally a national holiday, but it is celebrated as much as any of the traditional Chinese festivals. Some Christmas gifts have been specifically targeted at Chinese consumers. Apples for example, are sent as symbolic gifts. Known as “Holy Apples”, they cost five times more than usual and are packed as gifts to wish people a happy Christmas Eve.
Christmas, or “Pasko”, is the most awaited celebration and in the Philippines, the countdown of 100 days spurs consumers with a penchant for early shopping, bazaars and endless holiday parties. This year, however, it may be a bleaker scenario as the peso hit an eight-month low against the US dollar in early October. The Philippines, like other emerging markets, is exposed to the crisis in the Eurozone through various channels. Europe is also home to many overseas Filipino workers who this year may be facing pay cuts and job losses. As a result, remittances are expected to hit a low this year. Remittances are a closely watched economic indicator for the Philippines since these largely fuel household consumption, which in turn serves as a significant driver of economic growth.
While visits to bricks and mortar stores may be down, online retailers in New Zealand are enjoying record numbers. During August, members-only online shopping club NZsale.co.nz attracted 1.5 million shoppers, which translates to more than 48,000 shoppers each day. “New Zealand’s consumers are still spending – they are just doing it differently. Christmas has certainly come early this year!” said Jamie Jackson, Founder and Chairman of NZsale. Increasingly savvy consumers are going online way ahead of Christmas to get the best deals on international and local brands, as well as to ensure all deliveries are completed by the end of November.
Despite the weakening global economy and the rise of unemployment in the region, some retail chiefs are still upbeat about consumer spending this festive season. Guy Russo, the head of discount department store chain K Mart in Australia, says he is positive about the crucial six-week trading period leading into Christmas. “I’m upbeat because I don’t think for one moment there will be less people shopping around at Christmas. If we can provide the products they want at the right price and quality then we have a good chance of getting a fair share of their wallet.” Meanwhile, supermarkets and retail outlets in Australia are also likely to discount prices more heavily in the coming months to try and attract cautious consumers back to the shops, according to the Australian Food and Grocery Council.