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Let the tills ring out for Christmas

Let the tills ring out for Christmas

Brands and retailers should not rule out last-minute Christmas marketing campaigns to people in more affluent areas of Britain, according to consumer data analysis unveiled by Acxiom today.

The marketing services firm has used its Affordability household finance database to create a ‘generosity index’, showing which parts of the country will fork out high percentages of their discretionary income* and which will spend much less than they could afford on the festive season.

from the North East and South West of England will lead the generosity stakes this Christmas, as they are set to splash out the highest proportion of their income on the festive season – while consumers in London and the South East are staying well within their means.

The analysis reveals that people in the areas at the lower end of the generosity scale (see tables and map below for more information) generally live in locations in London and the South East of England, and enjoy higher-than-average incomes, but are not spending high proportions of their discretionary income. This gives retailers and brands targeting people in these areas an opportunity.

These individuals are forecasted to spend conservatively relative to their high discretionary incomes and could potentially be persuaded to part with more of their spare cash if targeted in the right way with marketing campaigns and promotions.

Meanwhile, people living in areas at the top end of the ranking are more likely to have lower-than-average incomes. However, they are set to spend more than their discretionary income should allow at Christmas, meaning:

• They have saved up for several months in order to pay for the Christmas they feel their loved ones deserve; or

• They will overspend and be more exposed to debt problems in the new year. The latter finding is important for financial services companies.

Certain areas of the country are clearly going to overstretch themselves, and some households will be tipped into or face higher debt following their Christmas spending. It will be important for credit providers to know where those debt hotspots are likely to spring up, as people attempt to manage the extra pressure on their finances.

The full study, called Affording Christmas 2011: The Scrooge Report, ranks more than 100 postcode areas in England, Scotland and Wales in terms of their festive generosity. Unlike other surveys which predict an average monetary figure that British consumers are expected to splash out on Christmas gifts, the report shows which areas will overstretch themselves and which could be persuaded to spend more.

The report reveals that Sunderland, Truro and Plymouth are the top three locations where people will spend the highest proportion of their income on family and friends. Households in the Sunderland postal area will spend nearly one and a half times their available discretionary income (149%) - more than twice the national average figure of 64% of discretionary income being spent on Christmas.

Similarly, Truro folk will spend 145% of their monthly discretionary budget and Plymouth residents 134%. In the North East, Teesside, Durham, Newcastle, Hull and Darlington make the top 20. In the South West, Exeter, Torquay and Taunton are also among the ‘most generous’ places.

Meanwhile, the ‘Scrooges’ - those locations spending the lowest proportion of their discretionary income - are dominated by London and the Home Counties. Their predicted outlay is less than half what they could afford. Several areas of affluent Surrey - including Guildford where the prediction is that 31% of discretionary income will be spent, and Redhill (34%) - are in the bottom 10.

Similarly, friends and relatives of people in St. Albans (29%) and Slough (30%) should not expect the most extravagant gifts possible this Christmas. Residents of certain areas of England’s capital city will also under-spend. West London (29%) and South West London (30%) make the bottom five with both locations forecasted to spend modestly this Christmas relative to their high levels of discretionary income.

Murray Dudgeon, Acxiom Europe’s head of client services, said: “Whilst we are living in difficult economic times, our analysis has pinpointed the areas where people won’t necessarily spend what they could afford – leaving brands and retailers the opportunity to target these consumers in a bid to get them to part with more of their money in the run-up to Christmas. The study also shows parts of the country where people are prepared to spend over and above what their discretionary households budgets should allow, to give their loved ones the Christmas they desire.”

*Acxiom’s Affordability discretionary income measure is the amount of money each household has to spend every month after meeting legal obligations, such as mortgage/rent, Council Tax, utility bills, loans and school fees, as well as what the household spends on maintaining an acceptable standard of living, such as food and entertainment.

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