Time to get dreaming of a budget Christmas

Consumers are bent on cutting back on the cost of christmas, forcing retailers and brands to look for new ways to secure a portion of their spend.

When people open their presents around the Christmas tree this year, they are likely to find thoughtfully made and carefully wrapped gifts because it has become the season to get crafty, according to research by GMI, which runs online panels.

With 14 per cent of people planning to save money this year by making instead of buying gifts, retailers need to think creatively to ensure they stock the right products to assist these personal manufacturing initiatives.

Among the home-made gifts being planned for this Christmas, biscuits are the most popular, with 42 per cent of responses, followed by cards (34 per cent), jams and preserves (31 per cent) and Christmas cake (26 per cent).

Gift site Prezzybox.com and kitchenware brand Lakeland have both increased their supplies of ‘make to give’ products to reflect this growing trend (see Marketers’ Response, below).

GMI marketing director Ralph Risk says of the trend: “Craft gifting has a double benefit: it can help people save money and offers people more personal ways of giving gifts.”

Saving money is the motivation for 28 per cent of people questioned about their Christmas shopping plans via an online panel in October and November, according to GMI. More than half (58 per cent) plan to spend less on presents than they did last year, posing a challenge to much of the high street where retailers rely on a good Christmas trading period to keep profits healthy.

Risk says: “With people planning to spend less this year, retailers and brands need to work harder to persuade them to spend that money with them.”

Some people plan to play a waiting game, determined to buy all their gifts at the last minute when retailers have discountedtheir products (see The Christmas Standoff, below).

By comparison, 21 per cent of shoppers questioned by GMI had already purchased presents during sale periods throughout the year to spread the cost and budget for the festive season more effectively.

Meanwhile, almost half of respondents (43 per cent) plan to use discount vouchers in supermarkets to make their money go further. The drawn-out economic downturn has transformed consumers into professional deal-hunters, says Risk.

“Consumers are a lot more savvy with discounts. The downturn has meant people now understand a lot more about how to spend money wisely. They are looking at all the deals and like the idea of getting a good one.”

This habit is not likely to recede, Risk adds. “While the economy has picked up, people aren’t that confident. Many haven’t seen a positive effect, such as a change in their income or having more disposable income to hand. Instead of people spending beyond their means as they might have done after 10 years of boom [experienced in the mid-2000s], people are saying ‘Let’s just be a bit more cautious’,” he says.

Shoppers are turning increasingly to the internet for Christmas bargains, with people of all ages intending to order at least some of their presents online this year.

The internet will be the most popular source of gifts, according to GMI’s research, as 48 per cent of consumers intend to shop online and only 29 per cent plan to visit high street shops for their purchases.

Younger adults intend to do more of their shopping online than their elders, with 18- to 34-year-olds saying that 56 per cent of gifts are likely to be bought online while 55- to 64-year-olds put the figure at 41 per cent.

GMI’s Risk highlights the increasing ease of online purchasing, while noting that delivery charges are becoming more competitive. Online also makes it easier to compare prices before purchasing, he argues, so retailers will have to find ways to differentiate their offerings if they want to avoid competing on price alone.

“Retailers need to look at the service they provide or match prices,” he says.

But the high street still has an important role to play, Risk believes, as it can offer a shopping ‘experience’ that cannot be replicated online, making shoppers more likely to make spontaneous purchases.

“It’s easier to browse on the high street,” he says. “Online has got a lot better but you still have to understand what you want to buy.”

Brands with a presence on the high street should try to appeal particularly to female shoppers, says Risk, as the research shows that 33 per cent of women intend to shop there for Christmas gifts compared with 26 per cent of men.

While people are generally planning to spend less than usual this Christmas, almost 20 per cent anticipate spending up to £300 on food, presents and decorations, while 35 per cent expect to
spend more.

Of the latter, 21 per cent intend to splash out on food and presents, 13 per cent on alcohol and 8 per cent on decorations.

However, many individuals seem to have difficulty cutting back on gift purchases, despite their best intentions. While 45 per cent of those questioned by GMI have contemplated not buying Christmas presents this year, only 6 per cent intend to follow this through.

And while the majority of people will purchase gifts, most plan to do so while keeping within their means.

Just 7 per cent intend to borrow money to fund their Christmas purchases, while 38 per cent admit to being worried about how much they will spend in total.

Traditional habits die hard, however. Although shoppers generally intend to reduce their spending in some areas this year, most of them nevertheless plan to send Christmas cards to friends and loved ones as usual. The data shows 67 per cent of 18- to 34-year-olds and 85 per cent of 55- to 64-year-olds have this intention.

And while Christmas for many will be celebrated on a tighter budget this year, there will still be plenty of room for the festive spirit, which retailers and brands will hope to benefit from in the countdown to 25 December.