Christmas keeps getting more expensive

Get in early and shop locally to ensure supply chain issues don’t affect your ability to bring a smile to the faces of loved ones this festive season. Brianna Mcilraith reports.

‘‘This Christmas is looking very different for local businesses.’’ MYOB head of customer service

The cost of Christmas continues to rise in New Zealand, as Kiwis keep forking out more each silly season.

But global supply chain issues could hamper the jolly mood of giftgivers this year as retailers urge shoppers to shop local and get in early.

Stats NZ electronic card transactions data shows total retail spending has increased year-on-year for the month of December since 2016.

Kiwis spent $6.5 billion using their credit and debit cards at retail stores in December 2016, followed by $6.9b in 2017, $7b in 2018, $7.2b in 2019 and $7.4b last year.

According to a Finder New Zealand survey, the average New Zealander estimates they will spend $1012 on festive purchases this Christmas, with gifts expected to be the biggest expense at $352.

The online survey was conducted using a nationally representative sample of 2001 New Zealand residents aged 18 and over, and it found travel was the second-biggest Christmas expense with an average spend of $326. Food averaged out at $238.

Gen X-ers are planning to spend the most this Christmas, budgeting for around $1096 on average, followed by those in Gen Y at $1052. Gen Z is planning to fork out the least, at just $804 a person on average.

In past Christmas seasons, consumers have spent much more money on consumables, such as groceries and liquor, says the head of marketing at the University of Auckland’s Business School, Bodo Lang.

There was $2.7b spent on consumables using credit and debit cards in 2020. But durables were also popular – in particular, furniture and consumer electronics were big sellers.

‘‘As gifts, consumer electronics, such as cellphones and laptops, were popular and this was fuelled by preChristmas shopping and Boxing Day sales,’’ Lang says.

But with Covid-19 restrictions hampering the full operation of retail stores since August, many consumers could opt to keep Christmas shopping strictly online.

‘‘Savvy shoppers would have already been stocking their gift cupboards and taken advantage of sales throughout the year,’’ he says.

‘‘The big unknown will be what capacity the already stretched delivery channels, such as couriers and NZ Post, have to deal with the inevitable flood of last-minute online purchases.’’

People usually begin planning and shopping for Christmas on Labour Day, when the first of the sales kick in, Retail NZ chief executive Greg Harford says.

‘‘It’s hard to say how much is spent on Christmas presents compared to anything else but we would normally expect roughly $180 million to be spent overall across the period,’’ he says.

But with Auckland retailers only reopening on November 10 and supply chain issues, this would be a Christmas like no other.

‘‘There are some real challenges ahead of Christmas in 2021. Supply chains are stretched internationally and domestically.

‘‘If a customer wants a particular model of product, or a particular colour, it’s a good idea to shop ahead of time, so you be can sure of availability.’’

The supply challenges, and a generally increased focus on sustainability by customers, means there will be a greater demand for Kiwi products as we head into the Christmas season, Harford says.

‘‘Retail NZ strongly recommends that you don’t wait til the last minute to get your shopping done this year.’’

Trade Me spokeswoman Millie Silvester says new toy sales on Trade Me are up almost 60 per cent compared to last October, as Kiwis rush to get their kids the top toys for Christmas amid the global stock shortage fears.

‘‘With global supply chain challenges, there’s going to be a shortage of toy products this silly season. This means if you want that ‘it’ toy for your child this

Christmas, get in quick or risk missing out.’’

Trade Me recorded a 101 per cent increase in the sale of new Lego toys in October compared to the same month last year, along with a 48 per cent increase in the sale of new trampolines, and a 103 per cent jump in sales of new kids’ bikes.

Briscoe Group chief executive Rod Duke says now that Auckland retail stores are open, he expects there to be a boom in sales in the lead-up to December 25.

‘‘Christmas for the retail sector, without question, is our biggest time of the year.

‘‘December, January, February we probably write about half or even a little more than half of our total profit for the year.’’

MYOB head of customer services Jo Tozer says that even though it is our second ‘‘Covid Christmas’’, this year is looking very different for local businesses.

‘‘For this holiday trading period, New Zealand businesses will have to contend with the Delta variant continuing to spread, a change from the current alert levels to a new traffic light system, the potential introduction of vaccine passports, as well as some vaccine mandates for frontline staff, and a global supply chain that is looking increasingly fractured.

‘‘With timing still uncertain around many of these factors, all of this makes for an extremely uncertain picture, as many businesses work hard to prepare for what is traditionally a vital trading time for many SMEs,’’ she says.

MYOB’s Holiday Trading Snapshot data reveals that, on average, SMEs derive around 20 per cent of their annual income from the Christmas/New Year period, with 37 per cent saying the summer months are very or extremely important for revenue.

Nearly half (49 per cent) of the SMEs surveyed expect their revenue to be about the same as last year for Christmas and New Year. However, 28 per cent are forecasting their revenue will be down.

‘‘This Christmas is shaping up to be a challenging one for many local businesses.

‘‘However, we can all play a role in making this a better-than-expected Christmas for SMEs – the businesses that sit at the heart of our local communities,’’

Tozer says.