KEY POINTS:
As the economic recession hits household spending during the Christmas season, people are expected to shun the shopping malls and hunker at home for the holidays.
Tourism Industry Association chief executive Tim Cossar says: "Economic uncertainty may encourage New Zealanders to stay at home and hunker down with family and friends."
He is getting mixed reports about domestic bookings from the summer holiday destinations.
Retailers and tourism operators plan to offer significant discounts to attract consumers in the run-up to Christmas _ but instead of gift items, canny purchasers will buy vouchers to use at the Boxing Day sales.
Nick Tuffley, ASB chief economist, says more shoppers will take advantage of post-Christmas sales and that declining mortgage rates are positive for consumer spending.
People rolling their mortgages between now and the festive season could find they have more money. Petrol prices have dropped, reducing the "wallet-pinching pressure," but the financial and markets crisis will keep consumers cautious.
Tuffley says discounting has been more prevalent and he expects this will continue during Christmas shopping.
Linda Trainer, general manager of shopping centre management at Westfield, says its centres are looking at the run-up to Christmas "optimistically", while Rod Duke, group managing director of Briscoes, is conservative.
Across the group's brands, which also encompass Rebel Sport and Living and Giving, he is looking at the pre-Christmas period "aggressively" in terms of cutting prices. "Customers are doing it pretty tough in the suburbs with petrol, housing interest rates, food and inflation," says Duke.
Boxing Day is Briscoes' biggest day of the year, he says. "A lot of gifts are given by way of vouchers and redemption day for us is December 26."
Michael Hill says there's been a "quietening" in his stores in some areas but there is no pattern to trading, with some up and others down. Hill says he is not expecting a significant drop in Christmas sales throughout his international jewellery chain.
"Admittedly there's a lot of chaos but there are a lot of people living normal lives who have not invested in the sharemarket or taken large loans and seem not badly affected so far."
"What we found in 1987 and other downturns is that the jewellery trade does better than most because the very big purchases like the new boat, home or new kitchen are put on the backburner, but people still need to do something for Christmas, so they buy a nice piece of jewellery _ it's usually the first thing that's thought of."
"So we've ridden very well in times like this."
Hill says well-run businesses do better in downturns than those that are "a little loose".
"We have a lot of experience, having done the same format 250 times _ we've proved a model in four countries _ and that makes us more recession-proof than most other retailers because we have a global experience; which means we have taken a lot of hard knocks to arrive where we are."
Elizabeth Higgs, marketing manager at supermarket chain Progressive, says shoppers have taken to private labels such as Home Brand, Signature Range and Select, and staple Christmas products will be sold in these ranges. Customers have developed champagne tastes on beer incomes, she says, and will want some luxury at Christmas.
Shoppers are focused on bargain hunting, particularly for wine specials. "We'll continue to deliver good offers on wine up to Christmas." Retailers not offering good deals during Christmas will be "ineffective", she says.
Retailers Association Barry Halberg says retail is "pretty flat" and this will continue into the New Year driven by international factors. He hopes tax cuts effective on October 1 will help with the "reasonable" Christmas retailers are hoping for.
Like Christmas shopping, holidays are another discretionary spend.
Robyn Bolton, manager of Destination Northland, is hearing of advance bookings being 10 to 20 per cent down but says these mostly come from overseas visitors and the region is more dependent on domestic tourism than international visitors during Christmas.
She doesn't think domestic visitor numbers will be down _ only that holidaymakers may spend less, looking for cheaper options.
Jim Archibald, chief executive of Tourism Coromandel, says the word within the industry is that business is soft. "People are waiting to see what's going to happen... It's pretty uncharted waters. What will happen is probably in the lap of the gods."
Archibald expects to see good holiday deals. "It's a time when you can negotiate. There will be more interest in well-priced accommodation than at the higher-priced end.
"It may be that some of the activities operators suffer as well."
Paul Davis, chief executive of Nelson Tasman Tourism, expects less visitor activity during summer and says some will "trade down" on things such as accommodation.
KEEPING COSTS UNDER CONTROL THIS CHRISTMAS
Celebrating Christmas generally means spending money. The key is to keep costs under control, says Retirement Commissioner Diana Crossan.
Take control of your spending by setting yourself a budget: Work out how much money you can realistically afford to spend this Christmas. If using a credit card, know what you can afford to pay off each month in the New Year, remembering that to make headway you need to pay more than the minimum repayment.
Review your credit card limit: Ideally the limit on your plastic should be based on how much you can afford, rather than how much you might spend. If you think you might reach your limit this Christmas and will have trouble paying it back, consider reducing your credit limit now.
Avoid temptation: If you can't resist spending more than you can afford, leave your credit card at home. That will give you time to weigh up whether your purchase is essential or just nice to have.
Know the full cost of what you are buying: Always check out all the fees before signing any finance deal. This includes interest and any additional fees or charges. If a deal offers zero per cent interest, make sure you know what the interest rate will be on balances left at the end of the interest- free period.
Use lay-by rather than credit: If you don't have the money to pay now use lay-by rather than credit. This way you don't pay interest.
Shop around: If you don't have to use the finance or lay-by offered by a shop, you might be able to shop around for a better deal or ask for a discount.
Source: sorted.org.nz
