Christmas on a budget for austerity-struck Europeans

Across Europe, holiday "shoppers" this season are doing more browsing than buying. Retailers remain hopeful for a last-minute burst of Christmas consumerism, and some governments are encouraging it by allowing stores to open on Sunday.

But with economies across the region slowing and unemployment soaring, analysts say holiday spending in Europe is bound to disappoint for the fourth year in a row. In Rome, some shopkeepers say holiday sales are down 20% from last year. In Paris, refurbished second-hand toys are attracting buyers.

And in Spain, which has Europe's highest unemployment rate, some families are contemplating whether to give gifts at all. As in the U.S., holiday shopping is vital to many businesses: British non-food retailers can make up to 50% of their profits in the end-of-year push. In Germany, holiday business accounts for 30% of annual toy sales.

But the arc of the holiday shopping seasons is a little different in every country. The Dutch open presents on Dec. 5, the eve of St. Nicholas day and the last night of their "Sinterklaas" celebration. In Spain, many children tear open presents on Jan. 6, when tradition has it the Three Wise Men brought gifts to the baby Jesus. In Britain, France and most of Europe gifts are exchanged on Dec. 25.

As the 17-country eurozone slips back into recession, this festive season may mark a new normal for Europe, analysts say. Gone are the heady days when every holiday season meant a new record breached for sales. Instead, shops will have to fight it out for shoppers, hunting for bargains and quality and willing to wait for both.

"Every year it comes later," said Joachim Stoll, who co-owns Leder-Stoll OHG, a leather and luggage retailer just off the glittering Zeil pedestrian shopping quarter in Frankfurt, Germany. "People wait longer and longer, even after Christmas." European retailers are crossing their fingers that a boost will still come, as it did this year for the U.S.

Declining sales
There, total sales for the four-day weekend that kicks off the holiday shopping season around Thanksgiving in late November rose 2.7% to $22 billion, compared with the same period a year ago, according to ShopperTrak.

Sales since then have fallen 4.4% compared with last year, ShopperTrak reported Wednesday. Austerity measures implemented to combat the continent's debt crisis have hit Europe's economies hard: Nine countries in the 27-member European Union are in recession and unemployment across the region is 10.7%.

Retail sales across Europe have been on a steady decline since August and have yet to match levels last seen since the start of the Great Recession in 2008.

In October, the latest month for which official figures are available, retail sales in the European Union fell 1.1% from the previous month and 2.4% from the previous year, according to Eurostat. In Germany, Europe's biggest economy, retail sales fell 3.8% in October from the previous year.

"After a relentlessly tough year for retailers throughout 2012, many are now bracing themselves as spending doesn't seem to be headed for a big step-up at Christmas," said Shweta Chaudhury of MasterCard SpendingPulse, which estimates total UK retail sales across all payment forms.

Many customers may only be drawn out by the very best sales. Some shoppers say they may even start shopping for the 2013 holidays in the new year sales.

"There's this sort of conflicting trend, where retailers are pushing Christmas earlier and earlier each year, but at the same time shoppers are actually delaying their purchases to as late as possible," said Natalie Berg, global research director at research firm Planet Retail.

Smart shoppers
"Shoppers are very savvy today, and they know that the deals will come." In an attempt to bolster sales in the run-up to Christmas, leading British department store John Lewis has already started discounts on some items ahead of its usual New Year's sales. Women's Armani chinos were discounted 70%, and 50 pounds ($80) has been taken off the price of a 479-pound ($780) Bosch washing machine.

European officials are also doing their best to encourage shoppers. Italy ended its prohibition on stores opening on Sundays, and stores in Madrid and across France suspended their bans during the holiday season.

In Rome, thousands turned out to see Pope Benedict XVI inaugurate the season on Dec. 8 with a prayer at the statue of Mary at the foot of the Spanish Steps in the heart of the city's posh shopping district. But afterward, there seemed to be more gawking then buying.

"We are down about 20% from last Christmas season, and this is a rich area," said Lucia Ruffini, a salesperson in the Pandemonium boutique in Rome's upscale Parioli neighborhood.

"Let's hope for the (post-Christmas) sales." Some shoppers, like Omero Petrocchi, have been doing their homework all year. "There are sales, super sales, discounts, super discounts and nothing more. So where I see I can spend less, I snatch (gifts)," he said while browsing on Rome's chic Via Condotti, where some of Italy's most famous designers have shops.

"Then I put everything in the closet, so we already have it all for next year." But in Paris' upscale Galeries Lafayette department store, discounts were almost nowhere to be found, as shoppers buzzed around a giant Christmas tree in the store's famed central cupola.

A handful of clothing racks and Christmas decorations were marked down, but there were no sales to be had in the bustling toy department. The lack of pre-Christmas sales is pushing some Parisian shoppers across town to the workshop of a non-profit group that fixes up used, donated toys.

"These are toys at less than half the price of new ones that are practically new," said Antoinette Guhl, co-director of ReJoue. But she said that price is just one motivator; many shoppers are also drawn by the fact that association gives jobs and training to the unemployed and is recycling toys that otherwise would have been tossed.

"It's a more responsible purchase." Bryan Roberts, an analyst with Kantar Retail, warns that it's hard to generalize about this Christmas in Europe and turnout has been "incredibly patchy." For instance, in Spain, which has the EU's highest unemployment rate at 26.2%, many were preparing for a more sedate holiday.

"We'll have to see what the mood is among the family to see how much money we have to spend," said Elsa Barona, 59, an executive with an international food company. Barona said her immediate family – her son, daughter and her daughter's boyfriend – was still trying to decide what kind of meal to have and whether to give one another gifts; both her son and her daughter's boyfriend are unemployed.

"As I'm divorced, it's down to me to pay for myself and my close family group, so things are obviously going to be tighter than in the best years." – Sapa-AP 

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