Christmas belt-tightening in crisis-hit Europe

Mother Nature is helping retailers in many countries this year as there have been no snow storms keeping consumers home and playing havoc with deliveries.

However sharp spending cuts and tax hikes due to the debt crisis in countries such as Britain, Italy, Greece and Spain, along with fears of a recession next year, are leading many consumers to restrain their spending despite a flurry of promotions.

"Many shoppers this year find they need to consider their spending more astutely, reduce the number of people on their Christmas lists and turn to more practical and useful presents when gift giving," said Deloitte in its annual Christmas spending survey.

The consulting firm estimated in September that overall Europeans would trim their spending on Christmas gifts, food and entertainment this year by an average of 0.8 per cent to 587 euros, although the results vary considerably by country.

With the deepening of the crisis in the past two months the belt-tightening is likely to be even greater.

This is something that many Chinese manufacturers who were left with piles of unsold toys and decorations discovered first hand.

Jean-Emile Rosenblum, a cofounder and vice president of the Pixmania electronics and photo publishing website that operates in 26 countries, estimates a five to seven per cent drop in the average sale amount as customers cut back.

"There has been a crisis effect, cheaper products are selling, consumers are looking for the cheapest prices," he said.

"There are countries where things are getting tougher and tougher," added Rosenblum, citing in particular southern European countries.

Greeks are celebrating this year their fourth Christmas in recession as the country's economic contraction accelerates under the effect of tax hikes and spending cuts imposed under its international bailout.

Dimitria, a retired state employee, said pension cuts and higher taxes had led her to settle for "less expensive gifts" this Christmas.

In Spain, which has also imposed stiff austerity measures and where over a fifth of the workforce is unemployed, consumers are expected to cut back holiday spending by 17 per cent to an average of 560 euros, according to the Spanish consumer federation FUCI.

-- A "modest" Christmas or one "without presents" --

In Portugal, which is also being bailed out and its being forced to impose cuts, many workers have lost special bonuses for buying Christmas presents.

Nuno Camilo, head of the retail association in Portugal's second city of Oporto, predicts a "Christmas without presents" for many families.

Overall, he expects holiday spending to be down 500 to 600 million euros this year in Portugal.

Expectations that the crisis will worsen are leading two thirds of Italians to trim holiday spending, according to a study by the employers' association Confesercenti.

It estimated Italians would spend 1.2 billion euros less of their annual bonuses on celebrating the holiday.

Eight out of ten Italians said their Christmas this year would be "modest" in a survey conducted by the retail association Confcommercio.

In Britain, where austerity measures are also biting at consumers, retail sales fell by more than forecast in November at 0.4 per cent, which augurs poorly for Christmas.

Shops saw drops in the number of customers in the first week of December, which "shows festive sales are still on a knife edge", said Stephen Robertson, head of the British Retail Consortium.

A number of British retailers are already forecasting sales to be down.

Retailers active in southern Europe, like Germany's Metro and France's Carrefour, have also lowered their forecasts.

While Deloitte was still forecasting in September a modest gain in holiday spending in France at 1.9 per cent to 606 euros per household, the CREDOC research group expects spending on gifts will likely fall although food expenses should hold up.

In Germany, holiday spending should drop slightly but still remain at a high level according to the GfK research institute.

"Christmas remains a very traditional holiday and gift-giving is part of that tradition," said Wolfgang Adlwarth, who conducted GfK's Christmas survey.

Internet retailers are some of the few to have something to cheer about as bargain-hunting consumers flock to the web.

"In times of reduced spending people turn in particular to e-commerce," said Xavier Garambois, head of Amazon in France.

The association of French web retailers expects a 20 per cent jump in sales this Christmas to 7.4 billion euros, although this is largely due to an increase in both the number of retailers and consumers.

The growth should still compensate for a lower average sale amount, said Marc Lolivier of the web retailers association FEVAD.