What’s in store for retail at Christmas?

The last quarter of 2021 was a good season for grocery retailers and included a record-breaking Christmas week. With celebrations curtailed in 2020, shoppers were determined to enjoy the festive season in 2021 despite the unexpected concern that Omicron brought. 

While the nation had high hopes for a return to normality as 2022 began, the reality has turned out to be rather different. With inflation set to peak in the last quarter of this year and consumer confidence in the UK reaching an historic low, shoppers are being cautious and preparing for the uncertainty that lies ahead. It’s probable that this mood will continue for the foreseeable future, resulting in a more subdued Christmas. 

Current behavioural trends among shoppers include spending less per trip, buying fewer items, shopping around more and trading down. These are all to be expected during inflationary times. Helping customers spread their spend during the cost of living crisis will be crucial for suppliers and retailers, who will be wanting to support their customers and give them something to celebrate when Christmas arrives. 

Numerous factors will contribute to the season’s purchasing habits, but the desire for community and together-time over the festive season will remain. Replicating the on-trade experience at home with loved ones could be a trend again this Christmas as the off -trade continues to take a bigger share of sales. With no signs of incoming pandemic-related restrictions, shoppers will be able to plan their Christmas celebrations further ahead this time round. 

Retailers and manufacturers will be promoting early and looking to leverage the opportunities presented by events leading up to Christmas in an attempt to reignite their performance against high 2021 comparisons. 

The men’s football World Cup tournament will take place from November 20 to December 18. The event merging into the key Christmas trading period presents a once-only sales opportunity for party food and drink. Mega-sale shopping days such as Black Friday and Cyber Monday are already earmarked as key Christmas shopping times and could generate an extra high peak from falling within the World Cup period. 

Beer, cider and cola typically perform well in secondary retail display spaces during major sporting events, but retailers may want to prioritise spirits and wine, which both tend to generate higher sales uplifts on promotion closer to Christmas. 

Ninety per cent of UK households are more conscious of watching their spend than they were 12 months ago, so Christmas display space will come at a premium for brands. However, legislation changes on high-sugar products that are due in October mean stores could look a bit different this year. Festive products of that nature will see a significant impact and rely more on power aisles and in-aisle destination zones, rather than conventional secondary display. 

As we all try to make a little go a long way, buying gifts on a budget will be a consideration for many shoppers and promoting a gift with purchase could be a tactic that suppliers and retailers adopt to provide better value as prices are driven higher. It will undoubtedly be a diff erent festive season this year as we deal with the worst cost of living crisis in decades. Although there is a lot of uncertainty ahead, there are also many opportunities.

 

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