With the steep rise in inflation seeing many New Zealanders forced to tighten their belts, traditional Kiwi celebrations may be more restrained this festive season, a new nationwide consumer survey shows.
According to the latest MYOB Consumer Snapshot – a survey of more than 1,000 New Zealanders – the rising cost of living has prompted most Kiwis to reconsider aspects of their Christmas budget this year.
As a result of the added pressure on purse strings, nearly a third (32%) of those surveyed said they are planning a small Christmas at home, 30% are planning to spend less on gifts than they usually would, and 30% are expecting to spend less on dining out over the festive season. In comparison, just 1-in-5 (20%) respondents say their Christmas plans aren’t affected by cost-of-living increases.
However, despite plans to cut back on discretionary spending for some, the insights appear to show that overall, consumers are expecting and budgeting for some higher costs, and trying to balance this with cuts in other areas.
While food price increases have continued to outstrip inflation – rising 10.1% in the year ended October 2022, many dinner tables may be leaner this year. Consumers polled expect to spend an average of $413 on food and drink over this Christmas and New Year season, compared to $447 last year.
However, the average spend per person on gifts is expected to be around $132 – considerably higher than the $94 average in 2021 and $90 in 2020.
MYOB Head of Go-to-Market – Jo Tozer, points out that as more New Zealanders keep a closer eye on their festive season budgets this year, impacts may be felt by local businesses.
“While there is plenty to celebrate this year with borders fully open and restrictions removed, record high inflation rates and the rising cost of living has many New Zealanders taking a more reserved approach to the festive season.
“While our research suggests spending will be comparable to 2021 on most levels, with the dollar not stretching as far this year – especially on essentials like food – it’s likely many families will be adjusting what their traditional festive celebrations entail. As a result, it could continue to be a challenging end of the year for some businesses who will feel this pinch more than others as discretionary spending is reassessed.”
Shipping worries driving early sales
As the countdown to Christmas begins, one-in-five (20%) New Zealand consumers surveyed say they plan to start making their purchases earlier than usual this year.
Concerns about the supply chain are likely driving this trend, with 30% of those starting their shopping early saying they need to allow time for online deliveries, while 29% are shopping early due to delivery delays or shipping concerns, and 28% say they are doing so due to supply concerns.
When it comes to what they’re buying, many Kiwis are taking a different approach to gifts this year, as the lifting of COVID restrictions reduces the hassle of shopping. Clothing and toys are set to return to the top spot under the tree in 2022, rather than the option of giving gift cards and money – last year’s more practical favourites.
Top 5 intended gift purchases (in order)
1. Clothing and shoes – 47% (41% 2021)
2. Toys – 42% (32% 2021)
3. Money / gift cards – 39% (43% 2021)
4. Food / drink – 38% (36% 2021)
5. Books – 32% (31% 2021)
In terms of where they’ll be making these purchases, bricks and mortar stores will see a resurgence this year, with over two fifths (43%) planning to purchase most of their Christmas gifts at a retail centre or shopping mall, while slightly over a quarter (26%) plan to purchase most of their gifts from a local New Zealand business.
Online shopping also continues to cement its place as a popular Christmas shopping channel, with 21% of local consumers estimating they’ll do around a third of their Christmas shopping online.
Jo Tozer explains that while it’s encouraging to see many New Zealand consumers plan to shop local again this festive season, it’s important to understand many families will be shopping around for the best deals as they battle increased financial pressure.
“The festive period is responsible for generating a significant proportion of annual revenue for some SMEs so while it’s great to see roughly a quarter of consumers are planning to do most of their shopping at local businesses, many will be shopping around to avoid a financial blow-out at Christmas.
“Given the widespread economic challenges we’re collectively facing, however, businesses will be closely monitoring their forecasts and reviewing their targets in line with changing consumer behaviour,” says Jo.
Restriction-free holiday season leading to more cheer
Just over a quarter (26%) of New Zealanders surveyed say the end of COVID-19 restrictions has meant a change in their plans for the holiday season. Of this group, (44%) plan to do more local travel, 36% will host friends and family from overseas, while just over a third (34%) will take an overseas family holiday.
When all those surveyed were asked what aspect of the upcoming holiday season they’re most looking forward to compared to last year, top responses included:
• Being able to relax and unwind after a big year – 40%
• To shop without restrictions – 34%
• Being free to travel – 33%
• Not being stressed about COVID restrictions ruining Christmas plans – 32%
• Having their first Christmas since the pandemic as a whole family – 20%
As larger gatherings and workplace celebrations return, ringing in the ‘silly season’, just over 1-in-10 New Zealanders say they are most looking forward to going to Christmas parties.
