With the coming Advent shopping Saturday (1 December), the domestic trade will start the December-Christmas business again. The time from now on until the end of the year is expected to bring more sales to retailers. After reasonable sales figures last year (+1.26 billion euro or +2.4 percent), the outlook for this year is ambivalent: the overall economic conditions are optimistic, but the weak sales figures in the retail sector in some areas in recent months has led to scepticism and restraint. Against this backdrop, WIFO is forecasting a Christmas-related net additional turnover for the entire retail trade (excluding car dealers and petrol stations) in December roughly at previous year's level (1.25 billion euro). The total sales volume in December 2018 is estimated at a nominal 6.27 billion euro. On average, every fifth euro spent can thus be marked as a Christmas-related increase in turnover in the cash registers.
However, the level of the December sales peaks in many industries has declined continuously over the last years. Special promotion days in November, such as Black Friday, Cyber Monday and Cyber Week, but also the continuing trend towards voucher gifts, which are not counted as sales until they are redeemed in the following months, are shifting classic Christmas sales to other months. The change in consumer behaviour, such as buying more and more online rather than directly in-store, is also contributing to declining sales peaks. This ongoing trend gets worse given that most of the online shops are hosted by global players (Amazon, Zalando and Co) and, thus, not counted to domestic sales.
Nevertheless, the average December sales volume in the industry is around 25 percent higher than a "normal" sales month. The top 5 sectors with the highest turnover peaks are: toy trade and trade with watches and jewellery with around 125 percent, followed by book trade, consumer electronics and department stores with peaks between 70 and 90 percent.
A look back at last year's Christmas shopping volume with net additional sales of 1.26 billion euro (+30 million euro) shows that the positive mood of domestic consumers and the generally good economic conditions at the end of the year, coupled with a robust business performance in the retail sector during the year (January to November 2017 +2.8 percent nominal), resulted in a solid Christmas-related increase in sales. The sales volume in the entire retail trade (excluding car dealerships and petrol stations) thus amounted to 6.30 billion euro in December 2017. The unfavourable distribution of sales days further underlines the good result.
The outlook for the 2018 Christmas business is characterised, on the one hand, by an overall economic environment which has lost momentum compared to the same period last year and the first half of the year but can still be regarded as favourable. Consumer demand proved to be a stabilizing factor over the course of the year, even though consumer sentiment has deteriorated somewhat from its highs at the beginning of the year. Private household incomes were supported by the favourable situation on the labour market. Employment continues to trend upwards and unemployment is falling.
On the other hand, retail sales (excluding car dealerships and petrol stations) have been much weaker so far this year, especially in recent months. Sales (according to Statistics Austria) are currently nominally +1.8 percent from January to September and thus more than 1 percentage point below the comparable period of the previous year. The cumulative result up to and including November (WIFO estimate) should also deviate similarly from the previous year's figure. The mild autumn weather well into November had a dampening effect on the spending mood of domestic consumers, especially in the clothing and footwear segment.
Method note and data basis
WIFO defines the Christmas shopping volume in the retail trade as those additional sales in December that exceed a certain "normal level". The average sales development from January to November on the one hand and the trend and economic development in the domestic retail trade in recent months on the other hand are used as a benchmark. Calendar-related effects (such as the number of sales days or their distribution) are also included in the estimate on a weighted basis.
The turnover indices are taken from Statistics Austria's Retail Business Statistics.
