Will it be a Merry or Thrifty Christmas??

[Peter Watson]

I thought that the research from the BRC & KPMG and the Barclaycard stats were really interesting. My base case is that I think we’ll see a big uptick in spending going into the end of the year (people want a Merry Christmas after last year!) followed by a potentially big hangover in January where people will want to see how the dust settles. I think that if unemployment isn’t as much of a shocker as they think it’ll be at the beginning of next year, we’ll be in for another massive uptick in spending. What do you think?

[LaurenRoseF]

From an environmental perspective, Id like to think that it will be a thrifty Christmas. Not necessarily second-hand gifts but handmade gifts and less plastic and packaging waste. After all David Attenboroughs Netflix documentary did spark a lot of enthusiasm for sustainability. Generations are now being more environmentally conscious. However, whether this will all disappear at Christmas time, is to be debated. I do agree that people will definitely be wanting perhaps larger Christmases than before due to last year, which very well could include a massive uptick in spending. Although not great for the environment, I think this could be the revival of department stores. Then again the majority of the population have got used to shopping online and may decide to stick with that.

Also, the governments £20 universal credit cut is also very likely to impact peoples Christmas plans.

[Yifei Zheng]

Supply shortages and higher prices for essential goods like food, energy etc will probably be one of the main factors limiting retail spending. If the Bank of England responds to rising inflation by raising interest rates, that may limit the willingness of consumers to go into debt to make large gift purchases. On the other hand, I think the rise of alternative payment methods like ‘buy now pay later’ will mean that spending can still be sustained even with these higher rates. There have been several large acquisitions recently in this market, such as Paypal/Paidy and Square/Afterpay. Also, with the rise of online shopping due to lockdown, consumers have more choice in accessing cheaper products on apps such as Wish. Although the delays in shipping/supply chains may result in most people returning to the high street, particularly given the pent up demand/savings many households have accumulated over the last year.

[Peter Watson]

I know that this isn’t very “Christmassy”, but when you think about it Christmas is not very environmentally friendly! We use wrapping paper that is unrecyclable, crackers that have plastic toys in them, tinsel, glitter and then all the packaging on the gifts – not to mention the miles travelled by the presents themselves (and presumably there will be more of that by air freight because of the shipping shortages)! Having said that, I think that the overriding sentiment will be one of just being together with people that you weren’t able to be with last Christmas – and anything that will enhance that will be something many will be willing to suspend usual restraints for. It is something, however, that retailers especially could potentially get involved with and maybe enhance their green credentials by offering more environmentally-friendly products and services. I would expect debt levels to rise – and this may be more painful if the BoE decides to increase interest rates…

[Peter Watson]

You’ve made some very good points there, Zifei! Yes, I would have thought that all the BNPL will do very well over the Christmas/New Year period. It will be interesting to see how well delivery-related supply chains hold up because, as you say, delays and frustrations could well drive people back into the shops. I’ve never used Wish before! Is it any good?

[Xenia Baranova]

I agree with you Peter that it will be a Merry Christmas (as long as supply chains allow). I think the closer we get to Christmas, and the more we hear a message that there is a shortage of some type of food (especially Christmas staples like brie) it will cause panic as people will want to go all out this Christmas. Last year only three families could meet as part of the restrictions in some areas of England, in others you only had to stay within the bubble of people you live with. In January people will realise how much more money they spent than a typical year and will reign in their spending.

[Peter Watson]

Yes indeed! I for one am definitely going to be doing my level best to have a good Christmas! On that front, I’m definitely going to be going into London over the next few months and meet more Watson’s Daily Ambassadors for an in-person drink 👍🍻

[Yifei Zheng]

Wish is actually quite good for the novelty factor once you get past how slow the shipping is! I see their ads on so many platforms which is probably why they’ve become more popular! Current driver shortages probably don’t help though – one parcel I ordered about a month ago took around 2 weeks from landing in the UK to arriving at the distribution centre…

[Ines Pinheiro]

I would think people will be more inclined to spend money on activities and experiences rather than goods, not just because Christmas is about spending quality time with people but because the increase in prices would prompt people to be more conscious of how they spend money. Also, after we’ve been in lockdown for such a long time, getting together with friends and family is a huge thing. Hence some people might be willing to take a loan or request an overdraft, credit card, etc., to be able to enjoy this period (this, of course, will depend on whether the Bank of England increases the interest rate this year or not). If so, people will reduce spending in January and will focus on repaying their debts. But for the next couple of months, I think the hospitality industry will be a winner. Still, they will also feel a lot of pressure as more job vacancies are available and fewer people are willing to fill the positions.

Those interested in purchasing gifts and stuff could wait until Black Friday to get discounted goods that they can easily get online as people seem less willing to queue at stores considering COVID is still a risk. They could also rely on Buy-now-pay-later. However, are goods going to be delivered on time? I doubt it… and BNPL services seem to be widely available online with few in-store options. In such a case, this may be beneficial for department stores, as they can rely on eye-catching sales to attract consumer attention. But again, I don’t think retail spending will be that popular compared to previous years. What I think will increase spending is food. If the situation in the supermarkets doesn’t stabilise soon, people will start pilling up food in preparation for Christmas and New Year’s Eve.

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