Thrifty holiday shoppers avoid malls

It's beginning to look a lot like Christmas - or in this case, a little. Overall holiday retail sales are expected to slightly decrease on the year, but there are bright spots for some companies benefiting from their appeal to more cost-conscious shoppers.

Total holiday spending is expected to be around 12,380 Kč ($656) per household compared with 13,400 Kč last year, and spending on presents is expected to decrease from around 8,600 Kč to an average of 8,000 Kč per home, according to a survey from Deloitte, a global consultancy firm. At the same time, sales are expected to be centered on hypermarkets and department stores, as opposed to malls, and online shopping continues to pick up.

"Hypermarkets are generally in a better position with respect to the price," said Martin Tesař, the partner in charge of Deloitte's audit function. "If the key factor for the buyer is price, then most likely the buyer will carry out a purchase in a hypermarket."

Department store spokespeople who spoke with The Prague Post echoed that reasoning and said they expect some sales growth this season, which is in contrast to other shopping outlets like malls that expect sales to sag.

"[Shoppers] want to buy everything under one roof, and they demand high-quality, inexpensive goods," said Eva Karasová, a spokeswoman for Tesco. She said the British department store expected sales to increase 5 percent to 10 percent this season.

Saving money will play a huge role in what products will be filling stockings this year, as around 25 percent of shoppers will not increase their spending from last year, and 61 percent of shoppers surveyed plan to only buy gifts for their immediate families, particularly their children, the survey said. Sixty-six percent will look for products sold as special deals.

The most popular items for gifts will be traditional and practical gifts, the survey said, such as clothing, books, cosmetics and computers. Further down the list but still popular are electronics like iPods and mobile phones.

"This year, customers are buying more brand-name and premium products," Karasová said, but those products still come from the traditional categories of clothing, cosmetics, electronics and toys. For toys, Tesco has boosted the supply of brand names 30 percent, Karasová said.

In another sign of the value of practicality for shoppers, 40 percent of shoppers are expected to buy some of their gifts online, which is higher than in most other European countries, according to the survey.

"At the beginning, the increase was because of the boom in Internet shopping," said Jan Vetyška, executive director for the Association for Electronic Commerce. "But in the past two years, it has been because of the bad economy and new customers looking for cheaper goods."

Internet shopping has increased from around 10 billion Kč in 2005 to 27 billion Kč last year, and holiday shopping makes up about 30 percent of that, Vetyška said. He said holiday Internet sales this year should yield 10 billion to 11 billion Kč, compared with 8 billion to 9 billion Kč last year, with an average spending per person of around 5,900 Kč compared with 5,744 Kč last year.

The piles of boxes that result from the spike in online purchases have filled up the back rooms of shipping companies and put their employees on double duty. At PPL, a DHL partner company dedicated to the shipping of products bought online, work goes through the roof around the holiday season and requires deployment of additional delivery personnel to work at 110 percent capacity, said Milan Loidl, director of marketing and business at PPL.

"At the end of the year, we have seen enormous growth in the number of items - some days up 100 percent compared with the normal annual average," Loidl said, adding that people have not reduced their online shopping because of the crisis and austerity measures. "It seems that people have only delayed purchases."

Despite their dominance over shopping centers, department stores have had to address the rise of Internet shopping, which could threaten their sales. Tesco has a limited online store and is preparing to launch a pilot version of a full online store next year. But Kotva, a Prague department store that has existed since 1975, is battling Internet shopping in a different manner.

"We realize that more and more people are buying online, mainly because of the comfort of [shopping from] home," said Jaroslav Petrů, general director for Markland Holdings Ltd., of which Kotva is a part, so the store has created rest areas like cafés to make the shopping experience more enjoyable and has introduced an incentives program where customers can receive chocolate, live carp and Christmas trees.

"We want to reinforce the perception of Kotva as the traditional Christmas shopping place for the whole family," Petrů said.

- Klára Jiřičná contributed to this report.

Cat Contiguglia can be reached at
ccontiguglia@praguepost.com