GREECE

Greece’s luxury spending spree sees slowdown

It’s not all been bad news for business in Greece. When capital controls were announced, they marked a huge boost for sales in luxury items. Omaira Gill reports from Athens.

The economic rollercoaster that Greece has been riding in the last few months has thrown out some unusual patterns. As the country's referendum was called, quickly followed by capital controls that have seen Greek banks close for business, many Greeks who didn't move their finances out of their bank accounts in time went on an unprecedented spending spree.

Greeks are currently restricted to a daily cash withdrawal limit of 60 euros ($65). This limit however doesn't apply to purchases with credit or debit cards, and Greeks have been exploiting that. Scared that the capital controls would get worse and they would lose their savings, Greeks went shopping for TVs, cars, jewelry, smartphones and electronic goods to the point that Dixons Carphone, the parent company of the Greek electronics brand Kotsovolos, reported that sales of big ticket items like large screen TVs in the Greek market had helped boost their profits to May by 21 percent compared to last year.

Zolotas, the jewelry brand made famous by Jackie Onassis and Elizabeth Taylor, recently had a customer try to buy one millions euros worth of jewelry at their flagship central Athens store. They turned him down, preferring to hold on to the stock.

Capital controls have so far cost the Greek economy an estimated 3 billion euros, though you wouldn't know it if you looked in the right places.

Car sales in Greece up to June 2015 showed a 13 percent increase compared to the same period last year. At an Audi car dealership sales advisor Dimitris Sinanidis said "In relation to a month before all this started, we had many more customers and many more purchases. The cars they were buying were what most people are interested in anyway, the Alfa 1, Alfa 3 and Q3."

Money to burn

"People were buying cars because they were scared they would lose their money. Since the deal was reached, we've seen less customers," he told DW.

Slap it on the card

On the main shopping avenue of Glyfada, one of Athens' more affluent suburbs, Michalis, a jewelry store in operation since 1963, has seen a boost in recent weeks. Irini Tsibili, one of the owners, said: "For about two weeks now we've seen about 30 percent more sales than normal. People have been buying jewelry, either with precious stones or gold because the value of both of those has increased."

"And I've done much more business with credit cards in recent weeks. People were scared of a savings haircut, so they transferred their remaining savings to their cards and spent it that way," she told DW.

Not everyone though has benefited from the trend. Further down the same street at a different jewelry store, a staff member said sales had never been worse for them since capital controls were announced. "It was a disaster for us, the customers disappeared," she said.

"Things have been a little bit better in the last few days, but definitely not like it was before all this started." she said angrily, adding "What is a customer supposed to do with 60 euros a day? And how are we supposed to operate with these capital controls in place?"

The run on luxury items was unprecedented

Siege mentality

Antigone Oreopoulou, a counsellor and psychotherapist in Athens, believes this sudden shopping trend is a reflection of the siege mentality of many Greeks. "Because of our history with wars, occupations and many of us being refugees, in our DNA there is this feeling that something exists today and might not tomorrow. Greeks suffer from occupation syndrome, the need to consume everything today because they might lose it all tomorrow," she told DW.

"This shopping trend also shows a death mentality. It reflects the Greeks' historical desire for a good death. Like the 300 spartans who had a nice meal and groomed themselves before going to their deaths, today the Greek need to do something nice, so you can die happy comes in the form of buying nice things."

She added that the psychological impact of the crisis has manifested in a loss of hope. "What I see again and again in my office, especially with young people, is that they have no hope. Everyone I see tells me they are trying to fight this inner and external blackness by trying to create a small island of happiness to cope with the uncertainty."

Think again

Those who still have a few hundred euros lurking in their account should think twice before spending it on a similar luxury purchase, says Aristides Hatzis, associate professor of law and economy at Athens University. "Greek consumers are trying (clumsily) to invest their savings by buying luxury cars - a major mistake, the value falls steeply the day after the purchase - and other luxury goods," he told DW.

"Most of these hasty investment decisions are ill-advised. This is mostly money thrown down the drain. It would have been much better to keep their savings under their mattresses than to buy luxury goods whose price will rapidly fall with after the new tax hikes and the new recession, because of the steep fall in their demand."

As banks in Greece reopen on Monday, the trend in buying luxury goods has all but stopped. The queues outside ATMs grew less last week and the summer sale season is now in full swing with hopes that some of the lost revenue caused by capital controls might be clawed back.   dw de