Research - 08.07.2010 - 00:00 

Reduced expenses after Christmas

Consumer mood is on the up. Even so, 38 percent of Swiss households plan to reduce their expenses in 2010 - but not before Christmas.

7 December 2009. Consumer mood and people’s expectations regarding their personal incomes are on the up. Even so, 38 percent of Swiss households plan to reduce their expenses in 2010. Prof. Dr. Thomas Rudolph, Director of the Institute for Retail Management at the University of St.Gallen (IRM-HSG), blames the trend towards thrift on consumers’ increasing uncertainty.

Prof. Rudolph and his team have examined the extent to which Christmas business is being affected by people’s buying reticence in a representative survey among 2,000 consumers throughout Switzerland.

Decreasing expenses in spite of brightening consumer mood
More than half of all Swiss people are convinced that the economic situation will improve again in the coming twelve months. The more favorable mood is reflected in the assessment of the financial situation of people’s own households. Accordingly, 39 percent of all interviewees assume that their personal income situation will improve in the future.

Conversely, 18.2 percent of Swiss consumers expect a financial downturn. According to the study, a reduction in expenses of only 15 francs a week on the part of pessimistic consumers could result in turnover lossses of CHF 1.1bn for the Swiss retail trade.

16 percent intend to increase expenditure
From the interviewees’ perspective, the inclination to incur expenses will diminish in 2010. 38 percent are planning to reduce their expenses in 2010, whereas only 16 percent of consumers intend to increase their expenditure.

According to the study, two reasons in particular are responsible for the planned reduction in expenses: many consumers are expecting a decreasing disposable income as a consequence of higher contributions to health insurance and pension schemes, as well as rising rental, gasolene and power costs. Secondly, an increasing uncertainty is lowering people’s readiness to consume, and this uncertainty is additionally fueled by negative news about the consequences of the global economic crisis.

Full wish lists despite economic crisis
More than 95 percent of all Swiss consumers have a concrete idea of what they would like for Christmas. There are no differences between consumers with optimistic and pessimistic expectations regarding their households’ financial situation.

Both these findings would indicate that the Swiss retail trade may be looking forward to unclouded Christmas business. If retailers succeed in aligning their products with consumers’ wishes, it will not only be the Christmas bells that are ringing, but also the cash registers.

Clothes, shoes, books, tickets
What is primarily in demand in the 2009 Christmas business are clothes and shoes (25.5%), books (24.6%), admission tickets (24.5%) and trips (23.8%). These four wish categories top the lists for both men and women. Whereas men would additionally be pleased to get consumer electronics (25%) and sports articles (20.2%), women’s additional wishes include jewelry (19.7%), perfumes and cosmetics (17.2%). Consumer electronics are in particular demand with the younger generation.

MP3 players and comparable articles, however, are gradually disappearing from the maturer generations’ wish lists. With increasing age, people progressively prefer good literature or admission tickets to cultural events such as plays and concerts. Traveling, too, is something people discover more and more as they get older. Although visits to hotels, a flight or a railroad trip are generally popular, they are particularly prominent on the wish lists of the over sixties.

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