How retailers can stop Christmas becoming a turkey
Men will buy more than half of the UK's turkeys for Christmas 2011, according to a report from Verdict Research and business analytics firm SAS, which found that retailers that want to make the most of the holiday season's sales potential may need to re-examine their ideas about who is doing all the shopping.
More than 10.5 million turkeys will be bought by UK consumers this Christmas. Turkey purchases start in earnest from mid-November while more than 5 million will be bought in the last week with 56.5% purchased by men. The research suggests that women send their partners out with lists to save time as they ready the home, wrap presents, prepare party food and organise decorations, leaving men responsible for the tree, drink, Christmas food and present shopping.
One of the most interesting things to come out of the report is who is doing the Christmas shopping these days, according to Maureen Hinton of Verdict. The survey shows that retailers should be more actively targeting men, for whom Christmas is one of the big shopping opportunities each year.
After a hard year in 2011, many retailers are relying on Christmas to make a profit before being hit by another tough quarter at the start of 2012. Consumers have already made it clear that they will cut back on spending as they try to recover from Christmas spending, and as they face increased utility bills and higher unemployment figures.
The report shows that UK households will spend some £86.5 billion in the run up to Christmas 2011 (a full £1.2 billion more than in Q4 of 2010), but that the volume of purchases will be down by 0.7% on 2010's figures. Although shoppers will be counting their pennies, spending on food, clothing, footwear, and health & beauty will all increase as consumers purchase Christmas gifts.
Spending on food will increase by 3.8% in 2011 (to £33.4 billion), outperforming overall retail growth - but only because of inflation rather than increasing sales. Clothing, footwear, health and beauty will also outperform as they are major gift categories due to their relationship to personal well-being. However, non-food sales will be hit the hardest, shrinking by 0.1% as consumers avoid big ticket items with home related categories expected to shrink by £490 million.
Online sales will fare particularly well due to the convenience, ease of access and ability to compare prices across different websites. Spending online will grow to £9 billion, which represents nearly 10% of total retail spending over the holiday period. This increase can, in part, be attributed to the increase in mobile commerce for price comparisons, ordering and checking stock availability. However, this does not account for the influence that online has on overall spending, with 63% of online shoppers researching online and then buying in-store.
The report detailed the UK's latest retail trends by sector, including:
- Online sales growth
Online sales will be a key channel for seasonal sales growth and innovation will be crucial in gaining market share (20.9% total sales). However, UK shoppers are wary of another year of heavy snowfall, with many consumers going online to browse before heading to stores to purchase items. - Food & grocery
Grocers are currently embroiled in heavily publicised price-focused marketing campaigns and private label ranges have gained greater credibility, with shoppers increasingly wanting to trade down. - Health & beauty
This will be one of the more robust sectors in 2011 due to relatively low selling prices and a strong focus on offering a wide range of products for gifting. In particular, perfumes are always a strong festive gift with late November/early December being the peak purchasing period. - Clothing & footwear
Clothing & footwear is expected to fare slightly better than other sectors this Christmas as they make affordable gifts compared to other larger big ticket items. Lifestyle and premium brands are expected to perform well with the in-store experience, brand perception and quality credentials helping customers to justify higher spend. - Electrical & electronics
Small consumer electronics will give the sector a welcome boost but an increase of 3.5% in volume will not be enough to drive positive growth in 2011 because this is one sector that is still deflationary. Online specialists should perform well with their competitive prices and varied delivery options providing shoppers with a far more convenient mode of shopping. After Christmas, market volumes will rise as consumers take advantage of sales but like-for-like comparisons are likely to be poor as many consumers bought big ticket items one year earlier in anticipation of the VAT increase in January 2011. - Books, music & video
These products will struggle as demand for physical music and video products continue to drop off and more consumers take to tablets, e-readers and downloading. Price competition from online suppliers and grocers will continue to squeezes margins. Digital content does not fare well as a Christmas gift, while video games will not perform well because no new hardware and consoles have been launched in have been released in the second half of 2011. - Furniture & floor coverings
This sector will decline by 5% in Q4 2011 because - as with electrical goods - most shoppers made their big ticket purchases earlier in the year in anticipation of the VAT increase in January 2011, and are now wary of spending in the current recessive climate. - DIY & Gardening
This is the worst-hit sector with a 6.3% drop in expenditure over Q4 2010. The link to the housing market is the key factor behind its difficulties as consumers are reluctant to spend on big projects due to concerns with employment, household expenses and debt. Unless visiting for specific DIY purposes such as Christmas trees, consumers are unlikely to frequent these shops with the aim of purchasing Christmas gifts. As a result, it is more crucial for this sector than any other to closely monitor customer spending patterns and maximise sales opportunities during peak periods.
"The pressure on retailers this Christmas is unlike anything they will have experienced before. The key for maximising sales is about understanding when consumers are looking to purchase items and ensuring that sales prices are optimised accordingly," concluded Cindy Etsell, retail specialist for SAS UK. "Monitoring customer behaviour is critical for this and the information that retailers have about their customers from till receipts, credit and loyalty cards, and even wider unstructured data from sources like social networks can steer their understanding of purchasing patterns and ability to mark down prices at the optimum time to shift stock without losing significant margins."
Sources: SAS; Verdict Research / The Marketing Factbook.
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