29 Dec 2010
Christmas Sales Shine in Emerging Markets
Better Christmas Sales Recorded in the US, UK and Germany
29 December 2010 – Christmas sales this year were stronger than in 2009, with emerging markets largely outshining traditional markets by a wide margin, according to findings from the global network of the Hong Kong Trade Development Council (HKTDC).
While year-end sales soared on the Chinese mainland and emerging markets such as Russia, Brazil and Chile, results were satisfactory in the United States, the United Kingdom and Germany. Italy, France and Japan showed moderate declines in their Christmas sales.
Christmas sales in Hong Kong's major overseas markets are regarded as an effective indicator of Hong Kong’s export prospects for the year ahead.
Speaking today at a press conference, HKTDC Assistant Chief Economist Daniel Poon said that certain factors might have given a short-term boost to retail sales, adding that the buying mood in traditional markets is turning positive.
Among the factors was the severe snow storm in many parts of the northern hemisphere, which served to stimulate demand for winter garments. Another contributing factor in the UK was the advance purchases there to beat the January 2011 VAT increase.
Mr Poon noted that upscale products such as jewellery and watches fared somewhat better in many markets, while consumer electronics, notably tablet PCs, flat-panel TVs and smartphones, were among the biggest hits. For toys, basic and low-priced items were in demand, although video games also sold well. Sales of home-related items, however, were hindered by the property slump in the US, the UK and many other markets.
Mr Poon advised Hong Kong companies to respond to current consumer trends in traditional markets and to search for new business opportunities in such emerging markets as Brazil, Chile, Russia and other commodity-exporting countries. High on his list was the Chinese mainland, where the government is promoting domestic consumption and rural development.
Country and Regional Observations
- Christmas sales are estimated to have risen three to four per cent, a welcome improvement over the one per cent increase in 2009 and the plunge of almost four per cent in 2008.
- With retailers rolling out promotions to entice customers rather than deep discounts to unload excessive stock, Christmas shoppers were in a buying mood, purchasing more gifts for themselves and placing more emphasis on value.
- The newly extended tax cuts and unemployment benefits, alongside a cold winter and a slightly longer Thanksgiving-to-Christmas period, which lasted 29 days compared to 28 days in 2009, provided an added boost to holiday sales.
- Wealthy shoppers had reason for cheer this year, with corporate profits soaring, bonuses rebounding and the stock market up.
- But while more were willing to loosen their purse strings, Christmas shoppers have not lost their taste for bargains amid high unemployment and the weak housing market. Most shoppers stuck to low-priced and practical items, planning their shopping trips in advance to save money.
- Increasingly, shoppers resorted to mobile devices to search for well-priced gifts.
- While e-tailers, including a large number of brick-and-mortar retailers with websites and mobile apps, performed particularly well during the festive season, mass merchandisers and discounters again captured a big chunk of year-end business.
- Overshadowed by the fiscal and debt crisis, festive spending was generally cautious, although Christmas sales results varied considerably from country to country. Most consumers were conservative, sticking to their budgets and hunting for practical products.
- In Germany, overall sales are estimated to have exceeded the 2009 level by about 2.5 per cent, in contrast with the slight fall last year.
- With unemployment declining and consumer sentiment picking up, German shoppers were more willing to spend, and retailers did not engage in excessive discounting.
- To the delight of German department stores and luxury shops, sales of jewellery and watches and other expensive items increased.
- Sales in the UK rose by about four per cent over the last Christmas season. Although consumers were still pessimistic about the outlook of the British economy, year-end sales were lifted by advance purchases to avoid the January 2011 VAT increase (from 17.5 per cent to 20 per cent). This was further stimulated by aggressive retail promotions.
- Christmas sales were lacklustre in Italy and France, with modest declines from 2009 levels. Shoppers in the two countries primarily opted for consumer electronics. Demand for luxury products was modest.
- With the economic outlook remaining uncertain, consumers cut back on their Christmas spending, leading year-end sales to fall mildly. In contrast with the US and Europe, the slow arrival of cold weather in much of Japan also weakened the demand for clothing.
- Holiday shoppers generally opted for basic year-end gifts, once again favouring discount stores over department stores.
- Amid the favourable consumption atmosphere, total retail sales during the first eleven months of 2010 were 18.4 per cent higher than the previous corresponding period. In November alone, retail sales soared 18.7 per cent, with sales in urban and rural areas rising 19 per cent and 17 per cent respectively.
- While Christmas is not traditionally celebrated on the mainland, it has begun to catch on in urban areas and more advanced rural cities, with more and more retailers putting up Yuletide decorations and undertaking related promotions.
- Feedback from the HKTDC’s mainland network shows that hearty retail sales were registered for most consumer products. Many mainlanders visited Hong Kong for holiday shopping.
Other Emerging Markets
- Christmas sales increases were generally recorded across Central and Eastern Europe, despite the Eurozone’s fiscal and debt crisis.
- Hungary and the Czech Republic saw modest increases in year-end sales, while Russia and Poland enjoyed encouraging results, with luxury items faring well.
- In Latin America, Christmas sales were especially strong in Brazil, Chile and Argentina. Year-end sales were modest in Mexico.
For the full report, please visit: http://www.hktdc.com/info/mi/a/ef/en/1X079L09/1/
Please contact the HKTDC's Corporate Communication Department:
Tel: (852) 2584 4216
About the HKTDC
A statutory body established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 global offices, including 11 on the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and throughout Asia. The HKTDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and on the mainland, while providing information via trade publications, research reports and online. For more information, please visit: www.hktdc.com