Prepare to get fresh for Y2K

Retailers must prepare for a rush during millennium celebrations as research reveals consumers’ plans for the festive season

As the new millennium approaches, retailers and manufacturers will be wondering what impact it will have on the British consumer.

Research by Taylor Nelson Sofres has found that significantly more money will be spent this year than in previous years. One key reason being that many consumers will be spending New Year’s Eve entertaining, or being entertained at home.

Forty-eight per cent of those surveyed believe they will spend more on fresh foods, while 36 per cent say they will spend more on alcohol. Frozen food and soft drinks will also benefit, as 26 per cent say they will spend more on these two categories.

While certain food sectors will benefit from celebrations, the threat of the millennium bug will also have an impact on consumer behaviour.

Forty-five per cent of households are planning to withdraw extra money in case cash machines break down. And four per cent might get into debt and hope the details will get lost due to the bug.

Planning for the millennium will be more complex than for the average festive period. Research indicates that more money will be spent to welcome in the year 2000.

Research shows that 75 per cent of households are planning to spend more on groceries this year, although 41 per cent of consumers will stock up in December, just like any other year. Some 64 per cent of households are likely to spend New Year’s Eve either partying at home or with friends or relatives, which is good news for grocery retailers and manufacturers.

Pubs and restaurants may lose out this year. Only ten per cent of people are planning on going to a pub or bar for the millennium and two per cent will be celebrating the arrival of 2000 in a restaurant. However, this could change as 62 per cent of households have yet to decide on what they will be doing.

How do consumers usually shop in the weeks before Christmas and New Year? Last year, saw £29bn of grocery sales between September and mid January, according to Taylor Nelson’s Superpanel Till Roll. Equally, the behaviour of Sainsbury’s shoppers compared with Tesco shoppers could help differentiate the stores in terms of understanding shopper habits and meeting their needs.

The demand upon suppliers, and the subsequent pressure on supply chains at this time of year is huge. Stocking issues for supermarkets are likely to be more pressing given the likely increase in consumption of certain types of grocery products, and the most important shopping days need to be well planned.

Looking at purchasing data over the past three years, there is little evidence to suggest that consumers start to stock up as early as September. In fact, it is evident that most purchasing in terms of the biggest proportion is done in December. The week before Christmas still attracts the most purchasing – December 23 being the most important shopping day.

The phasing of purchasing could play an important part in easing supply pressure. Last year, frozen foods followed a similar purchasing pattern to chilled and fresh. The sales of frozen foods peaked in the four week period, including Christmas and New Year, whereas the previous two years saw the peak four weeks earlier. This suggests that the purchasing of frozen food is now later, which has implications for suppliers as well as retailers.

With this knowledge, promotional phasing to alleviate some of the supply pressure in the Christmas period may be considered. Given the storage life of frozen food, encouraging consumers to buy pre-Christmas rush would allow more focus for chilled and fresh goods.

The performance of retailers at Christmas mirrors year-round performance to a degree. The top four (Tesco, Sainsbury’s, Asda and Safeway) accounted for about 60 per cent of purchasing in the Christmas 98/99 period. Asda enjoyed the strongest growth, which is likely to continue. In line with the market, December 23 and 24 are becoming increasingly important to Asda in terms of shares of sales.

There is evidence to suggest that Christmas grocery shopping will change this year – with demands for more product in a period which is already a logistical challenge to grocery suppliers and retailers.

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