Christmas shopping is like harvest time for retailers. This formula may not apply this year. At least that’s what the November revenues of domestic retailers show. In many cases, revenues significantly lag behind last year’s figures and even behind retailers’ expectations.
“Christmas sales are affected by the situation on the market and this year is much more complicated with regard to revenues than last year,” said Miloslav Hájek from C&A. “In the last few weeks we’ve been noticing that a large number of people come to our stores, but they don’t spend that much. Sales in November dropped compared to last year and the question is what the December numbers will show,” said Datart’s general director Pavel Sláma.
No toys or electronics
At least for now, the Czechs have decreased their spending for other stuff as well – retailers selling electronics or toys also complain about weak November sales. For example, the toy company Abrex, which produces metal toy cars, reports up to 20% lower customer interest than in the same period last year. “Retailers did order the same goods like last year, but some of those goods did not sell. Customers think twice whether they should please themselves,” the firm’s co-owner Radek Bukovský says.
A similar situation exists in other areas. “We’ve noticed a decline in November sales,” said Markéta Zelenková, marketing manager from Beltissimo, a company selling shoes and accessories. Car dealers are also complaining about their customers’ thriftiness. In November, for example, the sales of light utility vehicles dropped by one third compared to last year.
Crisis heading to ČR
The reasons are simple: The global financial increasingly affecting also the Czech Republic. According to a recent survey by the Czech Chamber of Commerce, half of Czech companies expect they will freeze wages next year and 25% of companies even plan lay-offs. Czechs are more careful about their spending this year, and while in recent years their spending has been growing, this year economists expect stagnation.
“This year’s Christmas won’t be as commercial as always,” said Pavel Sláma, head of Datart, whose November sales are also lower than expected. “Moreover, people have bought many things already throughout the year. Hopefully, the November drop will not extend into December,” said Sláma.
A survey conducted by Stem/Mark for the local Citibank branch showed that Czechs are not planning to spend more money for Christmas presents than they did in past years.
“More and more people have learned to wait for after-Christmas sales. Often they also go for cheap shopping abroad or order goods over the internet,” said Zdeněk Skála from Incoma Research, a company involved in retail market research. While in 2006, 41% of people were waiting for after-Christmas sales according to surveys, this year 50% of Czechs plan to do their shopping after Christmas.
The drop in sales before Christmas has also affected online retailers. “November revenues were not as high as we expected. We are up to 30% below our plan in some commodities,” said Petr Král, Internet Mall’s marketing manager, adding that even the warm and un-Christmas-like weather is not helping boost sales.
Discounts may help, retailers pray
Retailers are now therefore trying to attack customers with the help of various discounts. The majority of stores are preparing discounts or special offers before Christmas. “We are planning a great number of Christmas offers, always focused on certain type of goods,” said Tesco spokeswoman Eva Karasová.
Other retailers preparing similar campaigns. “Discounts are necessary especially with non-food goods, such as textiles. Food is sold as much as last year, with prices of some goods now at lower level than last year,” said Petr Vyhnálek from Globus.
Translated with permission by the Prague Daily Monitor.