Specialty and household goods trade’s expectations for the Christmas season are slightly higher than last year  

Slower inflation and lower interest rates have given consumers more confidence in the future. At the same time, the tightening of VAT and the declining employment rate will weaken the purchasing power of Finns as the Christmas season begins.

“The tightening of VAT has been a significant blow to the domestic specialty and household goods trade that competes for customers with foreign operators,” says Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation.

The tightening of VAT and the reduction in purchasing power, timed to coincide with the Christmas trade, do not seem to have produced the tax revenue sought by the government. While the VAT charged by commerce on domestic sales has shrunk throughout the year, the original tax revenue forecast of the government’s budget proposal for this year has already had to be reduced by almost EUR 900 million. However, in 2023, companies in the commerce sector were responsible for up to approximately 50 per cent of all VAT revenue in Finland through the VAT on products.

Despite the tax policy complicating the operational preconditions of domestic trade, the expectations of the specialty and household goods trade for the end of the year are slightly higher than last year at the same time.

“Expectations have been trending higher for about a year, which is, of course, positive. However, the sales expectations of the specialty and household goods trade are still below the long-term average,” says Kurjenoja.

Christmas season begins in mid-November

Over the past 10 years, the start of the Christmas season has shifted closer to Black Friday, while Christmas trade only really started around Independence Day just over five years ago. The significance of November in Christmas trade has increased significantly, and in home technology, for example, November is already a bigger sales month than December.

The increase in online shopping has increased the significance of both November and foreign trade for the Christmas season. However, as December progresses, shopping is mostly done domestically and in physical stores. Fears of delivery difficulties in online shopping also direct customers to domestic stores as Christmas approaches.

“The monitoring of website visits to stores shows that the various global campaigns in November attract Finns to the websites of foreign online stores and marketplaces, while in December, online visits are more targeted at domestic trade,” Kurjenoja explains.

December is the biggest sales month for retail

Even though the importance that November has for the Christmas season has increased in recent years, December is still by far the biggest sales month of the year. Sales in December grow by about one-fifth compared to the monthly average for the year.

“Even though the relative importance that December has for the daily consumer goods trade has diminished in the 2010s, December is still by far the biggest month for sales for grocery stores and supermarkets. Finns mostly do their Christmas food shopping closer to Christmas Eve,” says Kari Luoto, Managing Director of the Finnish Commerce Federation.

The success of December sales in department stores and many areas of the speciality goods trade is critical, even though it is not always possible to predict everything.

“In some product categories, such as clothing and sports equipment, the weather can have a major impact on the success of Christmas sales,” says Luoto.

In November–December last year, the domestic retail trade revenue subject to value added tax totalled approximately EUR 9.7 billion, or EUR 3,440 per household. However, most of this is normal daily consumption that isn’t dependent on the season. The additional consumption brought on by the Christmas season was about EUR 214 per household.

“Of course, the additional consumption brought on by the season is greater, as some of the money is directed abroad and some is used for other services. However, consumers have a great opportunity to support Finland’s employment and economy by buying from companies operating in Finland while Christmas shopping,” says Luoto.

See also: Frequently asked questions about Christmas trade

For further information, please contact:

Jaana Kurjenoja, Chief Economist, Finnish Commerce Federation, tel. +358 (0)40 820 5378, jaana.kurjenoja(at)kauppa.fi

Kari Luoto, Managing Director, Finnish Commerce Federation, tel. +358 (0) 400 688 708, kari.luoto(at)kauppa.fi