Thursday, 8 December 2011

Scientific Formula for Cutting Christmas Costs

With recent research showing that a massive 40% of shoppers are planning to spend less on Christmas this year, a North West shopping centre has taken the unique measure to step in and create the perfect shopping formula to help shoppers become festively frugal, without being seen as a ‘Scrooge’.

The ‘gift giver’ formula, commissioned by Warrington-based Golden Square Shopping Centre, has been developed by Professor Karen Pine to help people decide on the right amount to spend on everyone on their gift list this year, whether they’re having a cut-back Christmas or a festive blow-out.

“This is the time of year when most people feel under pressure to spend more than they should. The act of giving and receiving gifts has social and emotional significance and so it is a real danger area for over-spenders”, says the University of Hertfordshire Psychology Professor and author of Sheconomics, a book on the psychology of shopping.

“Many shoppers will be tempted to impulse buy, spend too much and risk going into debt – a real issue in the current economic climate.”

With UK households shown to spend most on Christmas in Europe with an average spend of £673.56, Golden Square’s ‘gift giver’ formula is an innovative way of helping apply a more logical approach to your spending budget for the Christmas season.

Ian Cox, Marketing Manager at Golden Square said: “We realise that it may sound strange that a shopping centre is helping shoppers to cut back on their Christmas budget, but this season is the time of year that sees most people slip into debt.

“The Golden Square ‘gift giver’ formula has been designed to help shoppers be practical with their budget this year and think responsibly about how much they can afford to indulge, while keeping the joy of the Christmas shopping experience alive.”

The formula takes into account two key factors: your current financial situation as well as the closeness to the person you are spending for to help cash-strapped customers budget wisely and not rely on debt to help them get through the season.

So what is the magic formula?

Average spend - Financial situation X Closeness = CHRISTMAS SPEND

To work this out you:

1. Take the average amount you spend on most gifts.

Do this by taking the total amount you spend and divide it by the number of people you buy for (exclude your partner or anyone you spend a lot more on).

2. Reduce the amount to take account of your financial situation.

Unless we’ve won the lottery, we should all take off 5% for austerity/inflation or up to 20% if you’ve hit harder times.

3. Adjust that amount for closeness*.

Add half as much again for someone you are very close to. But consider spending just a quarter of that amount for anyone you are buying for out of obligation.

*The Closeness Scale

See where the person you are buying for fits on the scale below. Then adjust the amount that you spend.

I’m just buying this person a present out of habit/obligation.I’m buying this person a present partly out of obligationI’m buying them a present because we are closeI’m buying them a present because we are very close
Divide by 4
Divide by 2

Multiply by 1.2

Multiply by 1.5

So, for example, a person spending £300 on 10 people last year, reduced 5% for inflation and buying it for a person partly out of obligation, should spend just £14.25 on their gift.

With ‘Panic Saturday’, traditionally the busiest day for Christmas shopping, around the corner on Saturday 17 December, this gift giver formula is sure to help savvy shoppers keep festive while analysing their spending habits.

Ian Cox, Marketing Manager at Golden Square said: “Our Golden Square ‘gift giver’ formula will help shoppers stick to their spending resolutions whilst still being able to enjoy the fun of gift giving over Christmas.

“We have some specially trained Customer Service representatives in the centre who are available during the festive season to help shoppers calculate what they should be spending.”

With so many people suffering job losses in the past twelve months the formula considers that if someone has been harder hit financially during the past year this should be reflected in a smaller spend on gifts and more consideration on stopping gift giving for people that we buy token gifts for purely out of obligation. Professor Pine’s retail rules consist of appropriateness, empathy and effort.

Professor Karen Pine concludes: “Gift giving is a social, cultural and economic experience that exists across all across human societies. It is extremely important for maintaining social relationships and expressing feelings. However, sometimes these feelings give way to a sense of obligation, buying for the sake of it, or even competitiveness, spending too much so as not to appear mean.

“Using the ‘gift giver’ formula will help to bring back the real meaning to gift giving. It reminds us to just give presents to those people we are close to. If that means not giving to those who have become an ‘obligation’, that makes sound economic sense.”

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