Czechs expected to spend record billions at Christmas

Packed parking lots, packed stores: that’s the situation in most Prague shopping malls these days in the final weeks before Christmas. According to reports, Czechs are spending more than ever: economists are predicting that this holiday season Czechs will plonk down record amounts, a rise in the billions.

Vladimir Pikora

For the economy there’s no season like Christmas and this year promises to be big: according to economists and retail specialists this year’s holiday will once again see record spending by Czechs. In 2006 it was some 250 billion crowns (the equivalent of 14 billion US dollars) and in 2007, spending will rise again. Gifts alone will naturally make up a large part of the margin, with Czechs spending on everything from appliances to foodstuffs and alcohol, to package holidays. Vladimir Pikora is the head economist at Next Finance; he describes some of the factors behind the spending boom:

“We see a record low unemployment rate and we also have seen fast growth of real wages and therefore people can afford to spend even more than last year. We expect that retail sales could increase between six to ten percent. This year we’ll certainly see record retail sales again.”

The big question is whether the record holiday spending will continue in the future: 2008, admits Vladimir Pikora, could see a difference:

“Generally, we have seen records every single year: every year the number is higher and higher as the economy grows and Czechs can spend more. But next year it is possible that we won’t see the rise repeated, as the country’s economy slowly loses its pace. Also, the country will see public finance reforms, which means that we will be able to see a rise in prices. People will have to think more about their expenditures, so it’s possible that this time next year spending will be less.”

This year’s pre-Christmas rush is only expected to intensify. As many Czech retailers have noted, most consumers traditionally leave their lion’s share of holiday purchases to later in the month, in other words to the “last minute”. Jiri Skocdopole, a retailer at Prague’s Pasaz Rokoko off Wenceslas Square, says the final weekend before Christmas is traditionally the “best”:

“It’s really going to take off now and I expect that we’re going to see an increased rush after the middle of the month, which also means payday for many. I think that people do have more to spend than before: buying bigger and more expensive products. The strengthening crown has also been a factor, lowering the cost of imports. I don’t know if spending will be higher than last year but in any case we are ready: we rented extra storage space, have increased our staff numbers, and of course are staying open holiday hours.”

More and more Czechs are also now buying over the internet, but economist Vladimir Pikora says that the percentage is marginal compared to brick-and-mortar stores selling in the Czech Republic:

“We can expect record-high sales on the internet as well but it will still be a small fraction of overall sales and will not have a large impact on the whole economy.”