As the lights, music and Santa costumes make their annual appearance, so do the wallets. It is safe to estimate that for most people, Christmas time means a lot of shopping and a lot of spending. However, in recent years the things people buy and the way they shop have been changing profoundly as we have taken advantage of online shopping, group buying, social sharing and mobile devices.
So what is happening this year? What does Christmas shopping look like for 2013?
What Are People Buying This Year?
It should come as no surprise that the number one thing on wish lists this year is the iPad. This is not the most cost efficient gift on the planet, but in a lot of ways it is like buying hundreds of gifts in one. According to Nielsen, 48% of children ages 6 and 12 years old in the USA said that they wanted an iPad more than anything else this Christmas. The story in Australia will be very similar.
Running a close second is the Nintendo Wii U and trailing right behind that is a variety of Apple products including, iPod Touch, iPad Mini and the iPhone. The next 20 items on the list of most wanted gifts for this year are all electronic, portable gadgets of some sort. I already have all the Apple gadgets I need, but it looks like there are plenty of others who want a shiny new gadget from the world’s most valuable company. With a new iPhone 5 and recently refreshed iPads, iPods and iMacs, I’d wager a bet that Christmas 2012 will be another bumper one for Apple.
How Are We Buying This Year?
It would seem I’m not the only one with In inbox packed full of discounts on hotels, cosmetics, spa treatments and hour-long massage therapies. This year more than ever, we are using daily deals like BrandsExclusive, Groupon and Living Social to purchase our gifts. And with an easy online purchase, group buying sites will save thousands of people both time and money this holiday season.
Do spare a thought for the businesses that get their offers wrong, like Rachel Brown, a baker who’s business was nearly ruined when her Groupon offer resulted in a flood of orders for 102,000 cupcakes that wiped out her profit for the whole year.
Another Nielsen study found that this Christmas 54% of people are using their mobile devices to shop via department store websites. Nearly 40% of online shopping related Google searches have come from mobile devices so far this season. During the Black Friday weekend when the entire US of A rabidly scours the web for cheap deals, Apple’s iPad accounted for 10% of online transactions followed by the iPhone at 8.7% according to IBM. Does it really surprise you that technology is influencing what and how we buy more than ever this Christmas? Any time I look around myself, I see people gazing at their phones and tapping away at something. It looks like that something is transactional.
The inaugural Click Frenzy event may not have been the sales winner that retailers were hoping for but it did reveal that there is plenty of pent up demand to shop online.
With the increase in the amount of people using their mobile devices to get department store coupons, it only makes sense that online shopping has seen a 34.4% increase year-on-year. Stores like David Jones and Myer are feeling the tension of balancing growing online demand with their real world stores, while popular international stores like Victoria’s Secret and Marks and Spencer are enjoying record levels of traffic. Store owners across Australia have reported that their shops have been quieter this holiday season than any year in the past, which is evidence of the shift.
In my opinion, this trend is not all good. Yes, there are many advantages to shopping online, not least the ease of comparison, low prices and huge choice. It does, though, come at a price. Our town centres, once vibrant communities, are already under pressure from national and multinational retailers who undercut locally owned independent stores. With increased competition from online stores, the ‘indies’ need to add more value if they want to stay relevant and in the game. I hope Australia doesn’t go the way of the UK where a trifecta of out-of-town shopping centres, price-cutting (and often tax avoiding) online stores and economic recession has decimated many of that country’s high streets.
How Are People Paying for Gifts This Year?
In years past, it would have been easy to say most people used their credit cards to cashflow Christmas, but the trends seem to be shifting this year. A study found that only 20% of Australians plan to apply for new credit cards to help pay for Christmas gifts. It also appears that the number of people applying for a credit limit increase as down by half.
Australians are going into the Christmas shopping season in better condition than years in the past. Studies show that only 3.63% of household debt is due to credit cards this year, the lowest it has been for over 11 years.
With that being said, whether the numbers are down or not, people will still use their credit cards to make purchases. So…
Here’s How to Use Your Credit Card This Christmas
There are ways to shop with your credit card at Christmas and do it wisely:
1. Create a Budget Up Front
It is wise to create a budget beforehand for each person on your list. Decide now how much you will spend on each of your children, your spouse, parents, friends etc. If you can make a list, divide up the costs and come up with a total, you can use your credit card without being unpleasantly surprised when January’s statement arrives. Keep your receipts and add up your costs as you to go ensure you are not breaking your own budget.
Tip: Do not forget to include food and household decorations in this budget. These things will add up before you even start shopping for others!
2. Do Not Make Impulsive Purchases
With deal-of-the-day apps and online coupons, it is easier than ever to see a great price on a discounted item, whip out your trusty card and buy it without thinking twice. Try to avoid this. When you see a great deal come through, pause and calculate how it will fit into your budget. The deal will still be there in ten minutes if you decide it is worth the purchase.
3. Take Advantage of Rewards Programs
Although it will take a little bit of extra planning, cashing in on your credit card rewards points to help you in your Christmas shopping can be worth it. There are two ways you can do this.
- If you have built up your rewards points look at how many points you have acquired and see if you can cash them in to get some of the gifts you would have spent money on.
- If this method will not benefit you, use your credit cards strategically to get points that you can redeem later. Taking a few extra minutes to plan how you can best shop with your credit cards will be well worth it in the long run.
Personally, I like the idea of earning points for spending, especially when I am going to have to buy something whether I like it or not, i.e. Christmas presents. That may make me sound like a bit of a scrooge, but if I can get something for free then that’s a deal I’ll take.
Tip: If you are playing the points game, make sure you pay off your balance on time. I’ve said it many times before – interest will quickly negate the value of your points.
4. Use a Low Interest Credit Card
If you are spending on a credit card this season, or at any other time of the year, and you know it is going to take you a few months to pay off your cards, make sure to use a low interest credit card to shop. You don’t want to incur any more costs than you need to and using a credit card with low rates will help you to keep down the fees and make it easier to pay off.
5. Know Your Credit Limit
Also, make sure you know your credit limit on all of your cards and do not exceed it. Some credit cards will allow the transaction to go through even if it is over the limit and then bill you for “over limit fees”. Keep your eye on your budget and your credit limits to make sure you stay within your means when you shop and avoid getting charged unnecessary fees.