The effect of Christmas on our economy

The effect of Christmas on our economy

In December the shopping streets are always more crowded due to Christmas. This is good news for the retailers, but are Sinterklaas and Christmas really as good for our economy as we think? And what is the impact of the crisis of last years on the money spend by people in the December month and the Christmas tradition?

Of course, Christmas is good for a part of our economy, however there is more behind it than people think. Retailers sell twice as much in November and December as opposed to the rest of the year, which equals approximately 30% of their yearly revenues. Every time people spend money this is good for the economy and thus Christmas is a boost for the economy. However, Christmas takes place every year and therefore it does not lead to extra revenues. It would only lead to extra revenues when we buy more than the year before. However, as currently we are still in crisis it is not expected that the revenues will increase a lot. The supermarket revenues for this year are expected to rise with 0.8% as opposed to last year.

Christmas_tree_in_marunouchi

Next to that, also part of the revenues which is earned on popular present flows to foreign countries because these goods are imported. Also it is analyzed that the value of presents received is less than the amount the buyer paid for it. This is due to the fact that not every present that is given is liked by the receiver. Research also finds that there are more products stolen in December than in any of the other months. First, it is busier in the shops and therefore the staff pays less attention. Second, there is a lot of temporary staff who are not always well trained. Third, shops have more inventory in December. This also means that a lot of value gets lost during the December month, which is not good for our economy. Therefore a lot of value gets lost during Christmas. However, even though some value gets lost for the reasons mentioned above, Christmas is still good for retailers because without Christmas retailer would sell way less.

So, Christmas is good for retailer but how does the crisis effect this? It seems that the crisis has not that much effect on the Christmas expenses of people. During Christmas people allow themselves some luxury without having to concern about money issues. Even though we are in a crisis, a lot of people still go out for dinner for Christmas and this amount is actually increasing. Another trend is that people eat more luxurious food because the supermarkets nowadays offer a lot of pre-prepared luxurious meals, for which the customer does not have to be a good cook themselves. They eat luxurious at home with their whole family more often. This can be summarized as the fact that approachable luxury is emerging nowadays.Poster from the Library of Congress by Haskell Coffin.

The current trend that is seen in the expenses on presents of the customers is that they do not buy less presents, however they spend less per present. This thus means that the total amount they spend on presents is less even though they still buy the same amount of presents approximately. This is also what is noticed by retailers: they do not have less customers, however they have less revenues per article sold. Another thing that is noticed is that the revenues of online shops are increasing during Christmas time. This is due to the fact that a lot of people do not go shopping, but order their presents at one of the many online shops which are emerging and might also be cheaper than buying at a physical store. Last year online shops had 8% more revenues than the year before.

Another Dutch aspect of Christmas is the ‘Christmas box’ (kerstpakket) which is provided by the company you work for. Even though companies are saving on a lot of things, the Christmas box is not one of these. One of the reasons being that it is a way of maintaining their company relations: they chose to express their appreciation to their employees in a Christmas box. The revenues on Christmas boxes are only a bit smaller than previous years. However, another shift is seen in this market. In the past the Christmas boxes consisted of extraordinary luxurious presents. Currently, it is observed that the Christmas boxes go back to what they traditionally were: a basket of luxurious food products. People already save a lot on their food expenses and therefore they appreciate to get more luxurious products for Christmas. Still there are also companies who buy non-food presents, however this market has decreased in size.

Concluding, all the arguments mentioned before show that the crisis does have an effect on Christmas expenses, however in a different way than we might have thought. The expenses are less but do not specifically change, people still buy luxurious products for Christmas. Therefore it can still be concluded that the December month is good for the economy even though expenses are less than in the past years.

 

 

The board of Asset | IB&M

The board of Asset | IB&M

Asset | International Business & Management is a study organisation of the economic faculty at Tilburg University. The board of Asset | International Business & Management is responsible for the daily functioning of the organization.
The board of Asset | IB&M

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