For most businesses, Christmas is the most profitable time of the year. In occidental society, shopping is a keyword for this festive epoque, thus, for most families, an important slice of the yearly budget is allocated to this season. However, this year, the world is facing a different Christmas due to the current pandemic crisis.
According to a study conducted by PwC, 40% of European consumers had their income decreased and 38% plan to reduce their Christmas expenses. Furthermore, the countries where the pandemic hit the hardest, are the ones where families plan to spend less.
In the other side of the Atlantic Ocean, according to Deloitte, the US households expect to spend down 7% year-on-year in this holiday season. Nevertheless, it is curious to observe that there are significant changes in the composition of the festive budget – less gifts and gift cards are purchased (-5% YoY) and there is an increase of non-gift purchases (+12% YoY). Moreover, socializing away from home/travelling expenses have the higher reduction (-34% YoY).
It is thus expected that these holidays will help tackling the actual recession, most probably being only able to function as a cushion for the disastrous 2020 economic year. Households have lower incomes and thus lower willingness to buy gifts. Santa Claus is not quarantined, but his activity will most likely be diminished.
Nova Economics Club wish you all a merry Christmas.