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Euro Holiday Spending: Ho-Ho-Ho or Ho-Hum?

It's getting to that time of the year when consumers dash around shopping centers and online outlets, pull out the credit cards, and buy up nifty gadgets for loved ones on their holiday-gift list. For electronics companies, the next four to six weeks brings with it some nail-biting anticipation.

This year, like the recent few, there's a gray cloud over consumer spending projections in Europe. Concerns about the debt crisis, new austerity proposals coming on the heels of government turnovers in Greece, Italy, and Spain, and a mixed regional unemployment picture may cause consumers to pause before whipping out their wallets. That said, it's tough to resist the urge to snap up a smartphone, tablet, video game console, or similar devices, and pent-up demand may convert even the most hesitant buyers.

Some reports point to a slowdown in holiday spending as countries in the eurozone seem to be sliding back into a recession. Citing data from the European Union statistics office, the AP reported that the local economy “barely grew in the July-September quarter,” making it “the second straight quarter of paltry growth.” There's little hope for growth in the coming weeks as consumers and government are expected to spend less, according to the report.

Not to rub salt in the wound, but if there's any truth in a view credited to European Central Bank president Mario Draghi by the Mail & Guardian online we'd all be wise to brace ourselves for even deeper cuts in private and public sector spending: “Europe's politicians, not its central bankers, must solve the crisis through the implementation of policy reforms and austerity measures.” This, in turn, will undoubtedly influence how end-customers view their personal job security and plan their household budgets for the coming months.

Consumer confidence reports for the EU are due out this week, and they may not look pretty either. Eurozone consumer sentiment is expected to slip to -21 from -19.9 in October; and in the UK, there’s already bad news on the table as the monthly Nationwide Consumer Confidence Index fell for the fifth straight month in October to a new low point.

Even if the signs seem to point to weak holiday splurging, I'm betting companies like {complink 4751|Samsung Electronics Co. Ltd.} are hoping for the best. Samsung, which has been embroiled in a patent lawsuit with {complink 379|Apple Inc.} over similarities in their tablet offerings, announced last week that it would release a modified version of its Galaxy Tab device in Germany this week. The news comes two months after a court barred the company from selling the tablet computer in Europe's biggest economy and just in time for the holiday shopping season. (See: Can the EU End the Apple-Samsung Patent War?)

I'm certain, too, many are hoping that the trade winds shift and some of the good retail tidings expected in the US blow towards Europe. Besides preliminary reports showing that US consumer spending has improved slightly, the Consumer Electronics Association's Annual CE Holiday Purchase Patterns Study shows that overall spending this holiday will increase as well. According to the organization, consumer electronics “will account for one-third of all holiday gift spending. Consumers plan to spend on average $246 on electronics gifts, an increase of six percent from last year and the highest level since CEA began tracking holiday spending.” The top items on the wish list aren't unusual: tablets, laptops, TVs, e-readers, and video game consoles.

I guess we'll know in a few weeks whether it turned out to be a bright deck-the-halls selling season or if consumers adopted a Bah! Humbug! attitude. Retailers and the electronics supply chain are waiting with bated breath.

42 comments on “Euro Holiday Spending: Ho-Ho-Ho or Ho-Hum?

  1. Houngbo_Hospice
    November 22, 2011

    “a mixed regional unemployment picture may cause consumers to pause before whipping out their wallets. ” 

    We surely should expect the economy to get better so that people would get their purchasing back. But we should also make sure that we don't spend the money we don't have. We have been living in a consumerism society where people use to buy more than they need and can afford. It is about time we changed our behaviour. We should learn to be happy when we already have the essential things. 

  2. Ariella
    November 22, 2011

    Very true, Hospice. Spending money you don't have is not a good move.

  3. Nemos
    November 22, 2011

    “We have been living in a consumerism society where people use to buy more than they need and can afford.” That is so true, almost all the world was built on this. But this concern hasn't to do with the crisis in Europe. Political authorities gave too much power and control to the markets, and now they are trying to balance in a very unstable environment. Economic crisis also shows us that there are huge holes in the Euro building.

  4. Anna Young
    November 22, 2011

    @Jennifer, Here in England, I'll be watching carefully what I buy. I love electronics and the economy behind it and my kids do too but right now I am focused on what we can afford than what we would like. As the blog noted, when you are in a hole, stop digging. All of Europe needs to hearken.

  5. Adeniji Kayode
    November 22, 2011

    @hOSPICE,You are right, it actually require a great deal of discipline to limit your spending in a time like that.

  6. Daniel
    November 22, 2011

    Jennifer you are right. Thanks giving day and Christmas seasons are the peak time for all types of business, especially for electronic gadgets. But this time there is a cloudy situation due to the slow down economic scenario and increased unemployment rate. This is true in most of the US/European and Asian countries.

  7. Adeniji Kayode
    November 22, 2011

    @Anna.Good point and good decision too. Sometimes it good to use only what is good enought and not what is best.If we all have to use what is best for us based on the level of income and our societal status,things may really go bad.

  8. SunitaT
    November 23, 2011

    We have been living in a consumerism society where people use to buy more than they need and can afford.

    @Hospice_Houngbo, very true and that is the reason I never believed in owning a credit card, because credit card encourages you to buy eventhough you dont have money in your pocket.

  9. SunitaT
    November 23, 2011

    Political authorities gave too much power and control to the markets, and now they are trying to balance in a very unstable environment.

    @Nemos, We cannot just blame political authorities for this mess.  Greedy corporate honchos are also responsbile for this mess.  I think this quarter sales number are very crucial as this will determine the future of the markets.

  10. FLYINGSCOT
    November 23, 2011

    Even though spending on large ticket items is down dramatically I reckon Christmas spending will be bright as usual as we all need to have some festive cheer in these doom and gloom times.

  11. Houngbo_Hospice
    November 23, 2011

    @FLYINGSCOT:

    “we all need to have some festive cheer in these doom and gloom times.” 

    I agree Chrismas is a special moment for people to gather with their beloved ones and have good times. But you don't need to spend a lot to have some “festive cheer”. You can do more with less.

  12. FLYINGSCOT
    November 24, 2011

    @Hospice…..please tell my kids that they need to do with less this Christmas (haha).  Seriously though, I do agree with you that it is possible but I bet you Christmas shop sales will be fairly strong again this year. 

  13. SunitaT
    November 24, 2011

    I do agree with you that it is possible but I bet you Christmas shop sales will be fairly strong again this year.

    @FLYINGSCOT, I really hope that we will see strong sales number this qurter because this is going to define the future course of slowdown. So people go ahead and shop a lot…lets push those sales number up :).

  14. Kunmi
    November 24, 2011

    It is very natural that a unique time like Chritmas will not pass without the heart of meriment. People will lay aside their challenges and enter into the cheerful mood and they will in turn after dDec 26th, pick their challenges up again. Challenges in the world economy may impact people a bit by cutting down the expenses but one way or the other, everyone will still pay attention to ho-ho-ho-Santa.

  15. Kunmi
    November 24, 2011

    We have been living in a consumerism society where people use to buy more than they need and can afford.

    I want to believe that today's economy has cut this to certain degrees. Now, you do not buy what you don't need. People that fall into Credit card temptation in our dizy economy have not learnt the lesson that the card has the teeth and it can bite. When it bites, it can reach the marrow.

     

  16. Jennifer Baljko
    November 24, 2011

    The holiday season is such funny time, huh? People generally know what they can or can't afford, but something happens once you're at the mall or scanning online retail shops. Think we mostly cast aside our budget allocations, and then complain about credit card bills until the end of Jan. Over the next few weeks, I'm planning to stand in the electronics section of the nearby department stores and check out who's buying what…

  17. Nemos
    November 24, 2011

    “I'm planning to stand in the electronics section of the nearby department stores and check out who's buying what…” Really ? ahahhaha like a spy or a detective . I think most of the stuff we buy during those days is not for ourselves but gifts. Ask a kid about that what would answer?

  18. Houngbo_Hospice
    November 24, 2011

    Hi Jennifer

    “Over the next few weeks, I'm planning to stand in the electronics section of the nearby department stores and check out who's buying what…”

    Please ask them if they are buying with their savings or on credit (if possible and get us posted). I hope people would be wise this time. 

  19. Ashu001
    November 25, 2011

    Guys,

    When I see all the reports pushed out by Analysts on the issue of European Demand one thing puzzles me for than most.Hardly anyone is willing to acknowledge the extent of Demand destruction that Austerity is going to wreck on the Eurozone.

     

    Going through the numbers,we are looking at Double-Digit fall in Demand for most Consumer Discretionory items(this is where Electronics fall) across countries as diverse as Portugal,Greece,Ireland,Spain,Italy and France.And people expect the US to pick up the slack for that kind of a fall???

    Ain't happening folks.Ain't happening.

    Here's a fascinating article which looks at some of the Dimensions of the issue at hand here.

    https://www.mcssl.com/content/166063/CC/112511_CC_final.pdf

    Regards

    Ashish.

  20. Ashu001
    November 25, 2011

    Jennifer,

    Sounds like an exciting venture!!!

    Kindly update us on how things work out here.

    Regards

    Ashish.

  21. AnalyzeThis
    November 25, 2011

    @nemos, right, a lot of the holiday electronics spending will obviously not be for personal use, but for gifts.

    I think it's pretty common for people to not buy things for themselves due to financial concerns, but to put those concerns aside when they're buying gifts.

    I'm not planning on any electronics for myself any time soon, but of course I'll be buying plenty this holiday season as gifts. My personal computer/electronics upgrades can wait.

  22. tioluwa
    November 25, 2011

    The EU financial crisis is scary to say the least, but i think holidays will always be holidays. Credit cards aren't common where i come from, so people actually save up to burn money during the holidays. Time will tell though, but i can bet that alot of cash will still be thrown arround this season.

  23. Wale Bakare
    November 25, 2011

    Infact, 2012 financial activities look very bleak. Lots of cut-back have been happening and i think, it's difficult to practically get hold on now. Though Eurozone politicians arent relenting in restoring the situation.

  24. Nemos
    November 25, 2011

    “My personal computer/electronics upgrades can wait.”

    How old is your computer? And how many years do you keep your personal computer?

    {I think 2 3 years} for a computer with a daily use it is enough} because most of the time we think the new is the better, but that it is not true always. (sorry for being out of topic)  

  25. t.alex
    November 25, 2011

    They will mostly buy on credit i believe. I really look forward to more Jennifer's updates.

  26. AnalyzeThis
    November 25, 2011

    @nemos, my personal computer is around 3 years old. I agree that 2-3 years is a good general rule, but I tend to try to keep mine around longer: my last PC I had for at least 6, maybe even 8 years, I believe. Of course I did upgrades, but not a full on replacement during that time. And then the computer was given to a relative for a year or two before finally meeting its end.

    With PCs these days, there's less need to upgrade them. In the 80's-90's the technology advanced a lot quicker.

    And of course the rules are different with other electronics, despite my desire to hold on to cell phones for long periods of time, I still end up swapping every two years pretty much like most people. Obviously there's far more advancement in that space than PCs, though, where a 10 year old OS like XP is still fine for most people.

  27. Houngbo_Hospice
    November 25, 2011

    “most   of   the   time  we   think   the   new   is   the   better,   but   that   it   is   not   true   always.”

    Actually, a new (computer) is most of the time better as it comes with more features and more processing power. We always want to try new things, don't we? But I do agree with you that there is no need changing your computer if it is still working fine. 

  28. Ashu001
    November 26, 2011

    Dennis,

    You seem to have hit the right issues here.

    This is the primary reason why PC sales have stagnated(and maybe even started to decline) while Smartphone sales continue to grow at double-digit rates every year.

    Probably also why all attempts to reduce landfill dumping have stalled.

    You have to give the market what it wants,no more ,no less and no matter what the cost to the environment is.

    Regards

    Ashish.

  29. JADEN
    November 26, 2011

    I think the best option is buying what is really necessary in need not what we desire because human wants are extremely unlimited, that is why most people run into debt to satisfy their needs.

  30. JADEN
    November 26, 2011

    Also considering the trend in recent TV technology, someone that has a well functioning Plasmatv or LCDtv and has internet access at home may want to have the taste of recent LEDtv with internet connectivity. But the person can save a lot of money by doing with what he already has.

  31. Ashu001
    November 27, 2011

    Scot,

    Who do u think is to blame most for Kids not willing to be content with less??

    I would say the fault lies with us parents.We all love our kids and want them to always have the best in life but sometimes this love can get in the way of them becoming independent and successful in life-So its very important to teach our kids notions of basic economics

    Like-Saving Money,Writing down your expenses ,tallying all your expenses on a monthly basis ,Understanding that the most newly fangled fad is not always what makes you the coolest kid on the block,etc,etc.

    For this the main thing is to be able to spend time with our kids.Which I think is way more important than working double-triple hours to buy the latest toy for them this christmas/New Years.

    Regards

    Ashish.

  32. _hm
    November 27, 2011

    Some people say Ho-Hum is long time due correction in economy and may settle down as new normal for near future.

    Family should analyze their need and their power and spend prudently. It does not matter what turn Economy has.

  33. Ms. Daisy
    November 27, 2011

    @ Jaden, well said! I am of the opinion that this economy will change the way we consume products for good. Current generation came in at the time of prosperity and had to do very little to get a lot. Now its gut check time, and the free stuffs or subsidized things are long gone. We will henceforth be guided by needs not wants, especially if this economic gloom tarries a little longer! 

  34. tioluwa
    November 28, 2011

    I'm not good with economic trends and pridictions, but i know many of these economic forcasts take into consideration human behavior.

    Alot of things has become part of our basic life in this century, and to me, it will take more than a dip in the economy to change all that.

    Even internet access is now a fundamental human right.

  35. Jennifer Baljko
    November 28, 2011

    Quick update – No surprise what people are interested in this holiday season at least in the mall and department stores in Barcelona: tablets. Had to stop in for something else Saturday late afternoon, and crowds of people were ohhing and ahhing over a half dozen tablets on display. iPads, of course, seemed to get the most attention.  There also seemed to be some interest in e-readers, and people are always lingering around the camera section. Wasn't close to an iPhone mobile operator, so no word on that.

     

  36. Eldredge
    November 28, 2011

    Ashish, I couldn't agree more. For one thing, as a parent I don't want my child's sense of value to be tied to what he/she owns. Confidence, assurance, and worth must come from inside.

  37. Barbara Jorgensen
    November 28, 2011

    From what I hear, Black Friday in the US went pretty well. However, prices were heavily discounted, so for consumers, it was great, but manufacturers may have problems reaching the level of profitbaility they expect.

  38. electronics862
    November 28, 2011

    BGR reports that online balck friday sales grew from 24.3% over 2010 and total black friday spending rose 39.3% over last year sales. Mobile sales increased to 9.8 percent from 3.2 percent last year. The numbers only is the valid proof to say holiday spending went on high….

  39. Eldredge
    November 29, 2011

    Those sound like pretty impressive numbers, given the overall state of the economy.

  40. Ms. Daisy
    November 29, 2011

    @ Barbara, the discounts may hurt the manufacturers profit margins, but at least they got rid of old inventories that may have otherwise continued to stay in the warehouses at added cost and tying down capital.

  41. SunitaT
    November 30, 2011

    True, numbers really look impressive infact some analysts are calling it a record year. Analysts cited a number of reasons for this jump, including extended store hours, good weather, increased online shopping and pent-up demand.

  42. Eldredge
    December 1, 2011

    Also heard this AM that purchasing on credit vs. debit was higher than it has been in previous couple of years, suggesting a change in buyers attitiude. Sometimes I think it is dangerous to ascribe too much to the numbers, but perhaps that conclusion is correct.

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