Disappointing December leaves retailer hoping for Christmas in January
Published:Friday | December 23, 2011 | 12:00 AM
Sabrina Gordon, Business Reporter
With continued soft economic conditions and uncertainty due to the upcoming general election, transactions at automated machines and point of sales (POS) remains subdued for the Yuletide season.
At least one department store, Ammar's, is banking on post-season sales in January to make up for the dampened activity.
Jamaicans are just not sure that their economic worries are behind them, notwithstanding green shoots of growth this year.
The post-Christmas election has also been identified as a complicating factor, which experts say can't be fully assessed until the end of December when all the data is in.
"Customer spending patterns are closely related to their emotional states. If they are feeling confident, they tend to spend more; if not, they tend to hold back to mainly essential activity," said Edmundo Jenez, general manager of JETS, the company that runs the multilink network on behalf of local banks.
"While the economic outlook has been slowly indicating some recovery, this has been modified by the uncertainty that comes with every national election. As a result, we note that shopping-related spending is somewhat muted," he said.
Up to December 19, total cash demand was up only 0.1 per cent over the same period in 2010, although Jenez said he expected that it would rise further to between six per cent and nine per cent by the end of the month.
The Bank of Jamaica also reported last week that in real terms, the public is projected to increase its demand for currency by six per cent, relative to December 2010.
The demand is projected to intensify during the second and third weeks of December and peak at approximately J$64.8 billion on December 28, the central bank said.
The increased demand, it cautioned, does not necessarily mean that consumers are buying more goods and services.
The JETS-operated multilink network typically supports around 370,000 cardholders each month and increases to about 500,000 with the addition of less frequent users.
Presently, the multilink network hosts some 551 automated banking machines and over 8,200 merchant terminals, allowing consumers to obtain cash or make payments.
Jenez said uncertainty about the future may have dampened shopping activity.
"A major social event, playing on emotional sentiment, such as the December 29 election adds a powerful uncertainty element that can affect consumer sentiment and disposable spending at this point," he said.
The trend Jenez said is for the Christmas season to typically show an increase in demand for cash at ABMs to support out-of-pocket spending, and significant surges for in-store spending at retailers for gift items.
CASH DEMAND INCREASING
Supermarkets, he said, also have higher demand, as do department and jewellery stores, book sellers, hardware, electronics and computer stores, which all receive increased business.
Although not as buoyant as last year, so far the data is showing cash demand from the start of December is up at ABMs by 3.4 per cent, while POS payments are up 13.5 per cent over last month.
Indeed, Jenez see a connection between the mood of shoppers and music.
"If music can be used at a barometer of the emotional state, we might note that seasonal Christmas music has not been heard as much as we might have in seasons past, suggesting subdued moods," he said.
Michael Ammar, managing director of Ammar's department store, says business has been flat for his chain.
"While the season is not over, the trend we are seeing now is thatit is definitely not going to be a bumper season," Ammar told the Financial Gleaner.
"The projection right now is for it to be on par as last year or even a little below, but I can't say until next week," he said.
Ammar said unlike other times, what he is seeing is that people are mostly shopping for themselves; few are shopping for gifts.
The busiest section of the store, he said, is the men's and ladies' wear as compared to prior years when it would normally be children.
Ammar is banking on a mood change after the elections.
"We expect a very good January - say January 10 to 14 - is expected to be very good as people who did not shop during the December period due to the pending election come out," said the retailer.
JETS projects that for the full month of December, demand for cash via the ABM debit network will climb to around J$20 billion or about 20 per cent over November.
Jenez also said JETS is picking up on a new trend where the seasonal surge of activity at yearend seems to be transitioning to a more steady pace of shopping in the months prior to December.
"Quite a bit of the formerly exclusive December activity are now spreading over several pay cycles," he said.