Bloomberg News

Italians Pass on Prosecco in Worst Christmas Since WWII: Retail

December 13, 2011

Dec. 5 (Bloomberg) -- Instead of prosecco and panettone, Italy’s Christmas will feature house wine and tighter belts as the country faces its worst holiday season in 60 years.

“Consumers just don’t have faith in tomorrow,” said Pietro Giordano, secretary general of Rome-based consumer group Adiconsum. Sales over the Christmas period may decline as much as 15 percent from a year ago, the biggest drop since World War II, Giordano said in a telephone interview.

Many Italians will spend their “tredicesima,” a December bonus equivalent to a 13th month’s salary, to pay bills rather than buy many gifts, he said. Those who can afford to spend are likely to trade down or hunt for a discounted Gucci handbag instead of the Jackie shoulder bag with tassels and light gold fastenings starting at $2,270.

Prime Minister Mario Monti announced 30 billion euros ($40 billion) of austerity and growth measures last night as he seeks to cut the euro-region’s second-biggest debt and prevent a breakup of the euro. The measures, including a tax on luxury goods and delayed retirement for many workers, were passed as the new prime minister rushed to reassure investors he is serious about taming a debt of almost 1.9 trillion euros.

Italian shoppers may cut budgets by 2.3 percent to 625 euros to spend on gifts, extra food for festive meals and entertainment during the Christmas season, according to Deloitte LLP. That’s almost three times the 0.8 percent decline predicted for Europe as a whole.

Blue Christmas

Consumer confidence in Italy is at the lowest point in the Christmas survey, now in its 14th edition, said Dario Righetti, a Deloitte partner in Milan, in a telephone interview. Spending on gifts will fall the most, with a 3.2 percent drop.

“I’m only going to be buying presents for the kids this year,” said Manuela De Luca, a 33-year-old self-employed lawyer, outside Benetton Group SpA’s flagship store near Milan’s 14th century cathedral. “I’m concerned about the future and what’s going to happen next year.”

Shopkeepers share the pessimism, with an index of retailers’ confidence falling to the lowest since March 2009 in November. Retail sales for September, the most recent period reported, declined 1.6 percent from a year earlier, led by shoes and household appliances.

No Cheer

“The fact it’s Christmas isn’t going to change anything,” said Tiziana De Pascalis, who runs a corner grocery shop in Milan’s Sempione district where sales are down at least 40 percent. “We’ve only seen growth for the past 15, 16, 17 years, but that’s changed and people just aren’t coming in.”

Carrefour SA, which is featuring bottles of Verdicchio for 1.49 euros, said Oct. 13 that sales in Italy declined 6.2 percent in the first nine months of the year.

The French retailer promises in its Christmas “Carrefour costs less” advertisements that “prices are near zero.”

Sergio Menegazzo, whose family owns the Smile chain as well as running a high-end restaurant and food hall at Gruppo Coin SpA’s Excelsior department store in Milan, said in an interview that supermarket shoppers in the Veneto region are cutting back on food spending.

“People are eating less pasta than a year ago,” Menegazzo said. “They don’t buy pasta topping. They put off buying mayonnaise.”

Some Italian families celebrate Christmas Eve, “La Vigilia,” with a seven-fish feast. The consumer group movimentoconsumatori.it estimates households may spend 1,000 euros on Christmas presents and food for Dec. 24 and 25.

The biggest ticket menu items for a family of eight are seafood antipasti at more than 50 euros; bass, bream and salmon for 35 euros; and clams with spaghetti at 24 euros.

And that panettone, a sweet bread studded with raisins, will set Italian consumers back 4.99 euros.

--Editors: Sara Marley, John Brecher

To contact the reporter on this story: Armorel Kenna in Milan at akenna@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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