European retailers are bracing for a tough Christmas season as shoppers plan to spend less amid rising costs of living, leading to the potentially worst festive period in over a decade. Dirk Van de Put, CEO of Mondelez International Inc, expressed concerns about the European consumer’s ability to spend due to double-digit inflation and soaring energy bills. In Germany, the HDE retail association predicts a significant drop in Christmas sales, while UK retailers are also preparing for a challenging season with surveys indicating decreased spending intentions.
The United States is not immune to the holiday retail struggle, as the National Retail Federation forecasts slower holiday sales growth and Amazon anticipates its slowest revenue increase in years. Amid these challenges, UK retailers like Marks & Spencer and Sainsbury’s are noticing a trend of consumers trying to spread out their Christmas shopping early to alleviate financial pressure in December. Additionally, more shoppers are turning to discount retailers like Aldi and Lidl, particularly in sectors like household products and snacks.
Despite the economic pressures, there is still optimism within the industry. Mondelez’s Van de Put noted that even though consumers are seeking discounts, spending on seasonal treats like chocolates remains strong as people look to provide small pleasures for their loved ones during uncertain times. In France, luxury brand Cartier took a subdued approach to marketing for the reopening of its flagship store in Paris, reflecting the cautious consumer sentiment in Europe. Spanish retailers are also navigating challenges by cutting margins and improving efficiency to maintain stable prices during the holiday season.
Italian consumers are similarly cautious, with a majority planning to reduce purchases and spending on Christmas gifts. Mauro Bussoni of the Italian small retail association Confesercenti expressed concern about decreasing purchasing power among consumers, signaling a challenging road ahead for retailers this Christmas and beyond. Looking ahead to the 2023-24 financial year, the retail industry faces further hurdles as consumer savings from the pandemic era are depleted, and operational costs continue to rise. Despite these challenges, retailers are adapting strategies to appeal to cost-conscious consumers and ensure a successful holiday season.
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