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Pulse Measures
Consumer Confidence Index
Canada:83.6 up
US:54.1 up
Business Confidence Index:
Canada:56.7% up
US:56.9 unchg.
Growth Rate GDP:
Canada:2.18% unchg.
US:2.5% unchg.
Jobless Rate:
Canada:7.6% unchg.
US:9.8% unchg.
Inflation Rate:
Canada:2.4% unchg.
US:1.2% unchg.
Bank Rate:
Canada:1.0% unchg.
US:0.25% unchg.
Prime Rate
Canada:3% unchg.
US:3.25 % unchg.
Conventional Mortgage:
Canada:5.44% unchg.
US:4.27% unchg.
Housing Starts:
Canada:168K
US:545K
Exchange Rate
1 CDN$ =$0.99 US$ dn
Gold
$1396.19 US per ounce up
Silver
$29.57 US per ounce up
Oil
$89.11 US up
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RetailPulse specializes in the analysis of consumer demand and the various economic, political and environmental factors that influence purchase decisions.
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Well we are in the home stretch- twelve more shopping days until Christmas!
Each year the Associated Press investigates the cost of giving the gifts immortalized in the traditional carol "The Twelve Days of Christmas". In total there are 364 items in the song, and the various items are tracked by the Christmas Price Index compiled by PNC Wealth Management. If you are looking to provide that special one in your life with this special gift this Christmas, be prepared to fork out nearly $100,000.
The cost of the Twelve Days of Christmas will set you back $96,824 this year, up 10.8% from last year.
What valuable retail lessons can be learned? First, the luxury goods segment appears to be recovering well from the economic downturn in 2008.
Second, the wise gifter always wants to include a component of gold (five golden rings) in their gift giving. Gold denotes real value and provides the recipient a hedge against inflation and a great investment. The cost of five gold rings was up 30 percent to $649.95.(A good ROI!)
Third, from a retailing point of view, the need for more "Mini 12 Day Sampler Packs" comes to mind as a way to deliver the essence of the gift but at a more manageble cost to a larger market segment. Giving one of each item of the "12 Days" would only cost you $23,439, or 9.2 percent more than last year.
The 27th annual Christmas Holiday Index has historically mirrored the National Consumer Price Index, but not this year. The PNC Christmas Price Index grew 9.2 percent from last year, compared with just a 1.1 percent increase in the much broader Consumer Price Index. Inflation will be the big issue in 2011 and leave retailers and suppliers scrambling to deliver value to their customers.
Jim Dunigan, of PNC Wealth Management, said "There's no doubt that our feathered friends in general make up a good portion of the increase. The price of feed and availability led to a 78.6 percent increase in the price of two turtle doves, to $100, and a whopping 233 percent increase in the cost of three french hens, to $150. Since many of the birds are corn fed, the impact of corn crops beings diverted to the production of biofuels has left its mark this Christmas season. Going green has its price, and it is not cheap!
"The good news is that the economy is improving, and we are starting to see some pockets of price increases, as long as the total basket is controlled," he said.
Only four of the 12 gifts in the song didn't go up in price from last year: the pear tree ($149, not including the partridge), four calling birds ($599.96), six geese ($150) and the eight maids-a-milking ($58).
The most expensive item on the list was $6,294.03 to hire nine ladies dancing, a 15 percent increase from last year. The cheapest was $12 for one partridge, a 20 percent increase. |
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Final Receipt
So is the economy improving? For those consumers with low debt and flush with cash this Christmas will be one of the best as far as bargins are concerned. Cash is King, and discounts are expected and generous when you offer to pay cash. Retailers margins will be squeezed and this will show in Q4 earings.
For the rest of us, the burden of higher taxes, uncertain job futures, more hidden user fees, and a 13% HST, are creating caution in our spending. Household consumer debt is the highest is has been in years so Christmas spending is expected to be down this season.
The most interesting aspect this Christmas will be the expected decline in the use of credit cards. The credit card companies are forecasting a 17% decline in credit card usage as households struggle to reduce consumer debt.
RBC is forecasting an average of $1137 per household for gifts, travel, decorations,dinners etc, which represents a decline of 7% over last year.
In the US, per household spending is expected to be down to $384 from $390 in 2010, according to the Conference Board.
The conculsion is that consumer disposable income is being squeezed harder than ever before. Retailers and suppliers need to find ways to hold the line on prices, while offering good value and product differentiation that will attract consumers. Promotions that are thinly veilled price discounts will do little to move volume or build share unless there is intrinsic value in the offer.
In the meanwhile, Happy Retailing!
Have a Merry Christmas and a Prosperous New Year!
Bryan Moir, Senior Economist, Retailpulse |
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