Christmas, as anyone who has done any supermarket shopping recently can tell you, is here already – or at least, the retailers would like to think so. Consumers, however, are less sure.
Research just published by Mintel suggests that more and more shoppers are putting off buying their Christmas supplies until the last minute. According to research conducted by NOP for Mintel’s new report “Christmas Shopping Habits”, 44 per cent of all adults do not intend to start their gift shopping until December.
Not only is this an increase on the 39 per cent response rate given in the 1997 survey, but an additional three per cent of shoppers do not intend to start their gift shopping until late December, which suggests a nerve-wracking time for retailers most exposed to late shopping activity.
However, it may not be all doom and gloom. Last Christmas there were many early December predictions of disaster for the retail industry as shoppers stayed away from the high streets, but there was a late burst of Christmas spending which actually made 1997 one of the better Christmas periods in recent years.
Retailers will be praying that a similar pattern emerges this year. Christmas is undoubtedly the highlight of their trading year, and if Christmas sales are good the financial year is invariably good.
Fourth quarter retail sales account for nearly 30 per cent of annual sales, with December alone providing 11 per cent of food retailers’ total annual sales and 15 per cent of non-food retailers total annual sales – almost double the monthly average of 8.3 per cent.
For certain non-food sectors such as toys and games, clothing, electricals and jewellery, the share of sales is even higher. The importance of good December sales serves to emphasise the critical nature of planning, staging and managing Christmas in all types of non-food businesses.
The possibility of a recession weighs heavily on people’s minds at the moment, despite assurances from the Chancellor that we are actually facing a soft slowdown.
With the deteriorating economic situation in mind, Mintel asked consumers what areas they would consider cutting back on if their financial position worsened compared with last Christmas. Perhaps unsurprisingly, the main targets for economies would be expenditure on alcoholic drinks and presents for friends.
Presents for “minor” relatives would also suffer, but expenditure on immediate family, especially children, seems to be largely untenable as far as most people are concerned.
Mintel also asked consumers which items they generally like to receive as Christmas gifts. Overall, and in descending order of preference, women would most like to receive jewellery, clothing, perfume, books and vouchers. Men, on the other hand, would rather have clothing, music, drink, books and aftershave in their stockings.
These preferences do vary by sex, age and socio-economic grouping: ABC1 women over 55, for example, would much rather have books than any other gift, while ABC1 men aged 15 to 54 would rather have music. In general, men don’t want jewellery, while women don’t want drink.
Shoppers were also asked for their attitudes to various developments in shopping, such as late-night opening and home shopping.
Extended hours should see a considerable uplift in usage this Christmas, with both late-night and Sunday opening more popular among this year’s sample than when the same survey was conducted a year ago. Interest in gift wrapping services is high, and clearly this is something that would attract shoppers to particular stores.
The incidence of crafty shopping appears to be on the increase, with the percentage of shoppers saying they were keeping money back for the January sales up significantly on 1997. Just over ten per cent of the sample indicated an interest in additional rewards on retailers’ loyalty schemes which might be on offer at Christmas. While this represents a relatively small section of the population, it is not an insignificant one, and clearly retailers with attractive loyalty schemes could do well with this particular group.
The propensity to buy gifts through mail order is also significantly higher among the 1998 sample, which suggests that additional activity by retailers offering direct home shopping services is beginning to have an impact on shopping behaviour.
The general economic outlook for retailers in 1998 is not as good as it was in 1997 and there has been a considerable downturn in retail sales. However, although in overall retail sales terms 1998 may not be as buoyant, key economic indicators such as inflation, unemployment and interest rates are still relatively low.
With marginally more consumers indicating that they expect to increase Christmas spending compared with Christmas 1997 than those expecting to be cutting back, retailers will need to hold their nerve and not be panicked into early price reductions.
The indications are that the surge in consumer spending will be as late in 1998 as it was in 1997, with the January sales again playing a crucial role.