Tis the season for christmas sales strategy

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Consumers bemoan the fact that Christmas seems to come earlier each year. So do brands get any real benefit from getting out the holly and mistletoe before the barbeque sets have been put away?

When two of the highest profile retailers in London announced in mid-July that they would shortly be opening their Christmas departments, the grumbling that surrounds the commercialisation of the festive season reached an audible level.

However, evidence suggests that those retail brands quick off the mark with their festive marketing are most likely to report robust figures in January. For the two stores concerned – Harrods and Selfridges – this year’s Christmas marketing strategy involves reaching tourists from overseas taking summer trips to the UK.

It is not just consumers that these retailers are aiming to please. Corporate clients who buy gifts for their staff and customers are thinking about doing so ever earlier in the year. Tracy Finn, head of corporate service at Harrods, reveals there is a marked difference in ordering times for this year compared with 2010, when many clients waited until November to place an order.

Austerity measures certainly don’t have top-end brands worried, with Finn stating that she expects a good year. However, she notes that spending is very much scrutinised and the biggest spenders also seek the highest returns. “We have a 50/50 split between corporates buying for staff and clients. The clients do tend to get the higher value gifts and what with the 2012 Olympics in London, we’re expecting some corporate Christmas gifting to be tied in with that.”

Meanwhile, Selfridges opened its Christmas shop on 28 July, rather than in August as it usually does, reporting that international visitors were up 40% in 2011 compared with 2010, particularly visitors from China, Russia and the US. Last year’s first week sales were double what they were in 2009 and Geraldine James, Selfridges Christmas Shop buying manager, says: “Christmas is coming earlier each year. I can see a time when we offer a capsule Christmas collection throughout the year.”

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Westfield, the destination shopping outlet in west London, sees nearly 30% of its annual trade coming from outside the UK and attributes its proximity to Heathrow Airport as part of the reason for this. However, it will be hoping for a non-white Christmas this year. The festive season in 2010 saw many retailers’ plans thrown into disarray because the cold snap meant deliveries failed to reach stores and online orders went unfulfilled as lorries failed to negotiate the UK’s iced-up road system.

Some retailers may be trying to plan ahead for any repeat freeze in consumer spending due to severe weather, but it seems that cost remains the overriding influencer of consumer behaviour.

Penny Tunnell, product director at gift and home decoration retailer Past Times, explains: “Customers are stocking the store cupboard early, dealing with the children’s gifts and spreading the cost over a few months. We are expecting some keen prices. You can expect to see a lot of multibuy deals.”

Despite the austerity, some sectors may actually see their higher priced items thrive. ’Treating in’ – where people are getting together and making an effort at home – will become more popular, according to Grahame Wright, marketing director for the English Provender Company, which makes traditional sauces and relishes. “We’ve seen premium brands grow on the back of this,” he says.

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Tunnell at Past Times agrees with Wright that the trend towards staying at home will continue and as such Past Times has bolstered its ’comforting’ ranges. “There’s a bit of a homing instinct, a nostalgia, that is playing around now. We’ve always had some retro ranges, such as Wombles and Bagpuss toys and gifts, and have extended that sensation to home décor. We began with Victoriana, then added an Art Deco range and for 2011 we’re adding The Snowman,” Tunnell says.

But cost will continue to be an issue and Tunnell reveals that the key price point for her sector this year will be around £10. “We’re not putting prices up this year despite inflation. We’re expecting the volumes to be there.”

Andrew Johnson, director general of the UK Gift Card and Voucher Association (UKGCVA), concurs with this view. “In gift cards we’re seeing a shift from luxury to practical brands. We’re seeing stronger sales in supermarket and mainstream high street retailers,” he says.

That hasn’t stopped the UKGCVA trying to make a gift that may seem a little on the pragmatic side appear more full of Christmas sparkle. “Gift cards are starting to work their visual merchandising more. Retailers are being very aggressive in terms of where they are placing them in store. It won’t be long before we see the Christmas gift card designs in shops. The innovations in putting them in tins or with limited edition designs are all working to make them seem more ’giftable’,” Johnson claims.

As the weather and cost drive people to shelter behind a computer screen, it seems the key for offline retailers this Christmas will be to hang on to shoppers once they’ve made the decision to venture out. Data from Econsultancy shows that 44% of Britain’s online adult population increased their online spending in Christmas 2010 compared with 2009, pushing the total amount spent to £2.8bn. Undercover malls may have the advantage here.

Myf Ryan, general manager marketing at Westfield UK, says: “For 2011, we will have the usual Santa’s grotto in both Stratford and Shepherd’s Bush, an ice rink and we will have a celebrity turn the lights on mid-November.

“We have a dwell time of over two hours at Westfield London but having an indoor environment helps. And customers want to be entertained as well as shop. A big focus will be on making coming to Westfield a real family occasion.” Just like Christmas.

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Grahame Wright

Brand in the spotlightQ&A Grahame Wright

Marketing director,
English Provender Company

Marketing Week (MW) What has been the biggest change in consumers’ Christmas shopping behaviour since the recession?

Grahame Wright (GW): There has been a dip of about 15% in the number of people eating out. This has led to what I call “treating in” where people are getting together and making an effort at home. They want to make it a special occasion. We’ve seen premium brands grow on the back of this.

MW: What lessons are you building on from Christmas 2010?

GW: The snow and subsequent freeze threw everything into turmoil last Christmas. Therefore, I would expect to see a strong focus on promotions in November, encouraging consumers to bring their shopping forward to avoid any logistical problems that we experienced last year.

MW: Is Christmas really ’coming earlier each year’?

GW: There is evidence that those who get to market early on are generally more successful than those who wait until mid-November. Although retailers are seeing this, it is not them that are pushing the Christmas marketing agenda. We are going to them proactively with suggestions about how best to approach this crucial time of year.

MW: What is the most important trend affecting your sector this Christmas?

GW: Christmas amplifies the wider trends that are going on year round. This year it’s all about the cheat ingredients. Because of “treating in” we’re seeing a lot of cooking from scratch but people’s time pressures are still there. They want to produce an authentic meal but need to do that within modern family restrictions.

We are relaunching our brand this month starting with the Christmas range. While our brand proposition is a premium product, we are also looking to capture the home-spun element. We bring helpful shortcuts that help people create great food.

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Tracy Finn

Viewpoint

Tracy Finn
Head of corporate service
Harrods

We’ve gone from seeing the corporate market looking to fulfil its Christmas orders late last year to starting pretty early in 2011. We launched our Christmas room on 28 July to take advantage of the tourist trade.

Perhaps this is because summer didn’t really take off in the UK and consumers’ thoughts are turning to winter already. Certainly much of our Christmas range is available from August, which is when our signature hamper campaign also launched. We would consider mid-November to be late for corporate clients to be looking to fulfill their staff and client orders, which is what they were doing last year. It may have been that people were still unsure of budgets because of the recovering economy.

The Harrods brand is clearly a draw, from the tourist wanting to buy bits and pieces from us as souvenirs to international clients investing in our signature food lines. Even if they buy other brands such as Mulberry leather cases for Apple iPads, coming in Harrods packaging is still a benefit for them. People want to get their hands on a quintessentially English brand.

However, their patterns of spending have changed. I don’t think more junior staff are getting such extravagant gifts any more. But bespoke gifts are doing well – people want something that isn’t necessarily expensive, but is something that the recipient will appreciate.

Two years ago corporate clients were perhaps more concerned about the state of the economy. But I don’t think that is the case now. It’s business as usual as far as the budget will allow and my gut instinct is that it is going to be a good year.

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