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Sunday, 18 December 2016

Is the writing on the wall that the Dutch economy is not as healthy as the powers-that-be want us to believe?! Sinterklaas sales in The Netherlands seem quite disappointing and especially the purchases per capita might have dropped. Strange indeed!

The year 2016 should become the first real post-crisis year in The Netherlands: the economy showed steady growth for a number of quarters in a row and the consumer confidence in October 2016 was at the highest rate in many, many years. And to emphasize the positive Dutch growth: the economy grew even stronger than anticipated by the Dutch Central Planning Bureau: north of two percent for 2016 and as well for 2017 (planned growth).

This is exactly the year in which one would expect that people would feel freed to spend more money on gifts in the holiday season than the year before.

And THE national celebration and spending holiday in The Netherlands is Sinterklaas (i.e.the Dutch version of Santa Claus / Father Christmas, but celebrated on December 5th). This holiday is already hundreds of years old and it is the traditional day when families give eachother presents; much more than Christmas in The Netherlands has ever been.

In the eve of this holiday one would expect that retail sales would go through the roof and that the number of electronic transactions would reach record heights with the favourable growth of the economy, except for the fact…that it did not seem to happen.

One of the traditions of Sinterklaas in recent years has been that the number of performed electronic transactions was measured. Every year there had been such news, full of boasting, that yet another record had been crushed by the electronic transaction numbers.

But this year the news was slightly disappointing, according to the Dutch newspaper AD:

During the last days before Sinterklaas there has been a substantial decrease in electronic transactions year-on-year. The electronic Sinterklaas sales missed last years targets by a mile on 4 and 5 December. According to the Betaalvereniging Nederland (the Dutch Payment Association) this was caused by the fact that these days were on Sunday and Monday this year.

On Sunday 4 December the organization counted rougly 5.6 million performed electronic transactions. That is 56% less than last year, when 4 December was on a Friday. And on ‘pakjesavond ‘(i.e. the night of the presents), roughly 6.8 million payments had been made until 17.00 hour; a decrease of 41%.

Of course it is quite important on which day of the week the Sinterklaas night is celebrated and I do believe that it has some influence on the sales numbers. But respectively a 56% and 41% decrease in retail sales on the last few days of the Sinterklaas period, in comparison to last year, seems too much to just be blamed upon the day of the week.

And even though the same AD article stated that there had been a massive increase in the number of online Sinterklaas sales transactions, it is hard to believe that that fully compensated the decreasing numbers of brick-and-mortar sales, as B&M sales numbers are normally still much, much higher than online sales.

So it seemed that the Sinterklaas sales in 2016 were actually quite disappointing in comparison with last year. And although the retail data confirming this phenomenon will only be published by the Duth Central Bureau of Statistics in February 2017, this conclusion was anticipated by the magazine Retailnews, which printed an article about this peculiar phenomenon, earlier in November of this year:

Retailers will book roughly 2% lower Sinterklaas sales this year in comparison with 2015. Per capita less presents will be bought, was disclosed by research of [research bureau] Q&A among 1500 consumers.

The number of people that celebrates the Sinterklaas holiday remained equal and the number of people who buys presents even increased. Nevertheless, due to lower spending per capita the total sales will decrease this year. Even though consumer confidence was in October at the highest level in nine years, the consumers remain cautious with extra spendings, according to Q&A.

Even though one could justifiably question the quality of such surveys [hence, the totally unexpected election of president-elect Donald Trump], it seems that this survey was correct and even overly optimistical, when the number of electronic payments stands model for the Sinterklaas sales (which it probably does in my humble opinion). Let’s see in January.

And please note the paradox in the red and bold text:

Question: Are you optimistical upon the Dutch economy?
Answer: Yes, we are optimistical about the Dutch economy. The government told us there will be growth north of 2% and the unemployment is decreasing quite rapidly now. So everything seems to be fine after all, after eight tough years.

Question: Will you then spend more money on Sinterklaas presents now that the economy is doing so good?
Answer: Hell, we won’t!

This phenomenon tells me that the people remain generally very cautious with their consumptive spending pattern and even spend less than last year, even though the economy showed a healthy growth during 2016. Isn’t that really, really strange?!

And don’t believe overly optimistical reporters who state that this loss of sales will probably be fully compensated by online sales or Christmas sales. Even if the online sales reaches a level of well over €8.41billion in The Netherlands in 2016 (the total online retail sales in 2015), this number probably won’t be far over 10% of total retail sales in The Netherlands (€95 billion in 2015). In spite of the impressive growth rates of the online channels, it is still a small minority of total retail sales and it will be so in years to come.

What about Christmas than? Even though it becomes more and more popular under pressure of the American influence via television and the online channels, it probably won’t compensate the disappointing Sinterklaas sales. Sinterklaas has always been and will be the most important shopping holiday in The Netherlands for at least the next decade, as old traditions have a habit of dying hard.

Further I don’t believe that the Dutch started to use cash again instead of electronic payments during the shopping holiday – albeit that that would be a tell-tale signal by itself. When the retail sales data will be published in February, regarding the Sinterklaas and Christmas sales, I strongly believe that these data will be quite disappointing.

What that tells about the Dutch economy? I think that it is not so strong as the government and economic pundits want you to believe. At least Jan Modaal (i.e. Dutch Joe Sixpack) keeps his wallet firmly in his pocket, during the most important Dutch holiday period for the retail industry. And when Jan Modaal does not spend his money again, the Dutch economy is yet not very healthy! I think the writing is on the wall! 

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