Bank survey forecasts Finns could spend 20% less on Christmas than last year

Families with children likely to cut back most, as present-buying becomes more measured

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Nordea Bank and the Federation of Finnish Commerce both believe that this year Finns will be sensible and will not go buying extra Christmas knicknacks in a fit of spending hysteria.
      A Nordic survey commissioned by Nordea Bank and conducted by Synovate suggests that this year the average Finn will spend some 20 % less money on Christmas than last year. Another distinct change is that a greater number of Finns plan to buy Christmas presents with money from tax refunds or savings.
      Christmas budgets have traditionally been expanding, but now er will see a contraction as people think more carefully about their actions.
     
The new development could already been seen last summer in the holiday plans of Finns.
      According to a Nordea questionnaire, asking for respondents’ summer holiday plans, the holiday budgets of Finns had shrunk by around 6 per cent. Because of increasing prices, Finns’ cash reserves were smaller than before.
     
”Compared to last year, people living in Northern Finland plan the most severe spending cuts. When comparing age groups, it is the 26-39-year-olds who will cut their Christmas budget the most. These age groups include families with children, who have this year faced considerable rises in childcare rates”, reports Private Economist Tarja Svartström from Nordea.
      Svartström points out that the change is not directly attributable to any uncertainty or to the current global financial crisis, but the most common reasons for Christmas budget cuts are households' weaker financial situation and higher living costs.
      ”I believe that this year people will put more thought in buying Christmas presents and will use their heads rather than their hearts. More people are likely to receive an experience as a gift instead of goods”, Svartström says.
     
Svartström adds that every third Finn between 54 and 65 intends to give money or gift vouchers as a present. This is how grandparents can support their children and grandchildren.
     
The Federation of Finnish Commerce has expressed a similar view on Christmas consumption, saying that this year’s Christmas sales will grow by 2 to 3%, amounting to approximately EUR 970 million. The figure includes Christmas presents, materials, and food.
      Matti Räisänen from the Federation says that all traditional Christmas presents, including toys, books, underwear, and other clothes as well as children’s sports equipment, will again rise in value and importance - in addition to Christmas foodstuffs, of course.
     
One of the reasons for the anticipated growth in sales is specifically the increased price of food.
      Räisänen estimates that if the prices of food, and the reduced hardware and furnishings sales are all taken into account, the overall volume of retail sales could remain the same as before.
      The overall taxable retail sales for December (excl. car and fuel sales) are predicted to be close to EUR 3.8 billion.
      By way of comparison, the total of retail sales grew by 4.6% in December 2007.
      Tiina Oksala, the Managing Director of the Federation of Speciality Goods Retailers, believes that the sales of special products will increase, when big acquisitions including cars and furniture are now being postponed.
      Oksala expects that the sales of books will increase slightly, or at least will not turn negative as in the previous year.
      The heavy snowfalls of recent days have apparently been good for sales of fashion items and sportswear, and there are certain categories that only follow consumer trends at a delay, such as watches and precious metal items. Cameras appear to be doing well in the home electronics department at present, after a longish period in the doldrums.
     
The Nordea survey indicates that those in Southern Finland intend to use around EUR 560 a head on Christmas, some EUR 90 more than further north. Respondents in Finland said they planned to spend as much as a fifth less on Christmas compared with 2007.
      One in three plan to use tax refunds to finance present-buying, as against only 15% last year. Around 3.3 million Finns will be getting a tax windfall totalling just under 2 billion euros on December 4th this year.
      Danes are likely to pull in their horns most, and Norwegians will be spending at close to the previous year's level.
      The information is based on a survey commissioned by Nordea from the international market research company Synovate.
      Over 1,000 people were interviewed in Finland, Sweden, Norway and Denmark at the beginning of November. This is the third time such a barometric survey has been carried out.


Previously in HS International Edition:
  Finnish households plan to spend more on summer holidays than do Swedes (11.6.2008)

Links:
  Nordea press release (26.11.2008): Finns´ Christmas budget under the microscope
  The Federation of Finnish Commerce
  Nordea press release 10.6.2008: Smaller holiday cash reserves in Finland

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