Retailers bank on improved Christmas sales
Swiss consumers are expected to loosen the purse strings in the run-up to the Christmas season after a sluggish year for retailers.
The predictions by the retail trade are backed up by the latest consumer confidence figures, which improved slightly in October.
“People are going out shopping and enjoying themselves once again,” said Peter Leumann, head of Jelmoli, one of Switzerland’s best-known retailers.
Leumann said that October was by far the best month so far this year for the Zurich-based department store.
“This makes us very optimistic about this year’s Christmas sales,” he told the Associated Press.
This optimism is echoed by other retailers. “Consumers are prepared to spend again,” said Globus spokesman Ernst Pfenninger.
The retail chain has seen sales of clothes, accessories and food take off lately, making up for some of the ground lost earlier in the year.
Misplaced optimism
However, forecasts for last year’s Christmas shopping season were also optimistic, but sales actually dropped by 2.2 per cent.
Retail outlets experienced a slow summer, with sales falling by 3.2 per cent in August. Important sectors such as clothing, electronics and furniture dropped by more than ten points.
The latest consumer confidence survey by Switzerland’s State Secretariat for Economic Affairs supports the view that the worst might be over, or at least partially.
Consumers are still downbeat about the economy, but they believe the situation has improved significantly since the last poll in July. On the other hand, they are worried about future income and spending power.
Analysts and retailers’ associations aren’t quite as optimistic as the retailers themselves.
“Consumer sentiment is certainly still depressed and this will not change soon,” said Credit Suisse economist Thomas Trauth.
Saturated market
The non-food sector has not shown any sign of an upswing, according to Thomas Hochreutener of the IHA-GfK market research institute, who says the market is saturated.
He added that there were no new breakthrough products to boost overall sales.
Hochreutener expects yearly sales to stagnate at around SFr84 billion ($61 billion).
Klaus Hug, president of the Swiss Retail Federation (SRF), agrees that consumers are refraining from spending because of job or pension concerns.
“These are all reasons why people are not inclined to spend a lot of money,” he said.
Hug said the lower end of the market had the biggest potential for growth. Discount and foreign retailers had the best chance of snapping up this trade according to the head of the SRF.
“European competitors are making their presence felt on the Swiss market,” he admitted.
Luxury goods
Sellers of luxury goods are not expecting any jump in sales.
“It will be the usual customers who have plenty of money that will be buying expensive items,” said Andre Hirschi, president of the jewellers’ association.
The cheaper end of the luxury market is suffering from stagnating salaries and the drop-off in bonuses.
Hirschi hopes that the improvement in the stock market will boost sales of luxury items.
Many retailers are pinning their hopes on improved electronic sales. Urs Wilhelm, spokesman for Interdiscount, said home cinema systems with new flat-screen televisions were selling fast.
“Old-fashioned televisions will soon be a thing of the past,” added Urs Spahr, head of marketing for electronics giant Media Markt.
A new generation of computers has also made its way onto the market. “We have plenty to offer,” said Spahr, “but shoppers still have to buy.”
swissinfo with agencies
Third-quarter industry figures released on Thursday by the KOF leading economic indicator support the view that an export-led upturn is on the way.
It said industrial firms and retail businesses were increasingly confident that growth would start to accelerate next year. KOF has forecast growth of 0.9% next year.
However, unemployment data due out on Friday is expected to show that the jobless rate is still rising.
The October survey of Swiss consumer confidence set the index at minus 28 points, slightly up on July’s minus 35 points.
Consumers are more optimistic about the economic situation, with the index climbing from minus 90 points to minus 64.
Their feeling about their past budget remained practically stable at minus 18 points.
But their outlook concerning their future budget situation went from plus two points to minus one.
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