‘Tis the season to go shopping

Supermarkets and online retailers may have made significant inroads into the gift markets over the past five years, but this Christmas the high street is looking for ways to win back shoppers.

The end of an Indian summer, the switching on of the Oxford Street lights and the arrival of Christmas on the Emma Maersk have begun this year’s festive season – and heralded the annual shopping spree.

From now on, chief executives and store managers will be anxiously monitoring till-roll figures day to day. Grocers in particular will be hoping to significantly increase their share of the Christmas market this year, by offering more non-food products than ever before.

Traditionally, grocers have been very strong in a few categories that have a high gifting potential: notably alcoholic drinks, confectionery and flowers. Although these categories still represent nearly 40% in volume of all gifts bought in grocers, non-food categories such as clothing, toys and games, DVDs and electronic goods are becoming increasingly important to their gifting business.

TNS GiftTrak reports that £2.6bn was spent on gifts from grocers in the past 12 months (up to June 2006) – compared with just £1.6bn in 2001/2002 – an impressive 60% increase in just four years.

However, grocers still hold only a 7.5% value share of the total gifts market – and more worryingly for store managers, the overall spend is static compared with the previous 12 months. In fact, the average spend per gift bought in grocers remains about £10, compared to £25 on the high street. Grocers already account for a significant share in volume (30%) of the small gift/stocking-filler market (gifts bought for £10 or less) but their main challenge is to get more shoppers splashing out in their stores on their main gifts.

New technology products represent an obvious sector in which grocers could have a significant impact. In the past 12 months consumers spent around £250m on household personal items such as flat-screen TVs, digital radios and MP3 players, making it one of the fastest-growing “gifting” categories. Another sector opportunity is children clothing – at the moment, one in four children’s clothing items bought as a gift is purchased in a grocers. Figures for CDs and DVDs are following the same trend, while in the toys and games category (including electronic games/consoles) grocers have more than doubled their gifting share in the past four years, from 5% to 11%.

Another threat for the high street has been the Web. A significant £2.8bn was spent online on gifts in the past 12 months (up to June 2006), compared to just under £700m in 2001/2002 – showing that the value of the online gifts market has quadrupled in the past four years while the rate of growth in grocers has recently almost come to a standstill. However, a large section of the population are still reluctant to use the internet to buy goods because of perceived risk of fraud.

In addition to this, e-tailers have suffered from some bad press, where consumers have complained about poor customer service. This is a key issue, particularly when people are purchasing items as a gift; they need reassurance that they will easily be able to exchange or return a faulty product within a reasonable time frame, and without hassle.

The profile of those who currently buy gifts online tends to a more male bias, younger and more affluent than any other source of distribution (store, catalogue or telephone). The most popular product categories bought as a gift via the internet are toys and games (15% share in volume), DVDs (14%), books (10%), CDs (9%) and electronic goods (8%).

Christmas is the ideal occasion for online shopping as it allows consumers to browse, compare prices and have gifts delivered (and wrapped in some cases), without having to face the crowds on the high street. The average spend on a gift bought online is £40 – around £15 more than the overall average spend on a gift.

Faced with this fierce competition from grocers and online retailers, specialist stores and high street outlets have had to respond in order to maintain their share – which is more threatened around Christmas time, when 40% of all gifts are purchased.

While grocers have focused on low prices and promotions to increase visitors, especially when selling key products such as games consoles, the high street stores have explored other strategies to stop sales loss. By offering a wider choice of products, placing more emphasis on client servicing and offering strong product guarantee/advice packages (which is particularly important for electronic goods) high street stores have managed to regain the edge on grocers by making the whole retail experience more enjoyable at Christmas time. Having more staff on the shopfloor to avoid long queues at the till, keeping inventory levels high to ensure product availability, and paying attention to “little things” such as free car parking and a gift-wrapping service are all part of what attracts and retains customers.

This Christmas will either confirm that the high street is firmly back on track, or will prove that the past 12 months were just a temporary setback for grocers and online retailers. Either way, it is likely to signify another change of pace in the gifting sector.

• Alex Seron, managing consultant of TNS GiftTrak, contributed to this week’s Trends Insight

Recommended

Thomson appoints Krow to 15m account

Marketing Week

Travel group Thomson has appointed Krow to handle its 15m advertising account for both the Thomson and Thomsonfly brands. The agency won the business after a five-way pitch that also included incumbent DDB London, Delaney Lund Knox Warren & Partners, JWT and Vallance Carruthers Coleman Priest.

Lies at work – no bullshit!

Marketing Week

Ever feel like you’ve been cheated? Well, the Diary does – and with good
reason.

According to author Graham Edmonds, we are “living and working in the
golden age of bullshit” and “being constantly bombarded with lies,
fakery and spin”.

He exp…

Comments

    Leave a comment

    Close

    Discover even more as a subscriber

    This article is available for subscribers only.

    Sign up now for your access-all-areas pass.

    If you're an existing paid print subscriber find out how to get access here.

    Subscribers enjoy unlimited access to unrivalled coverage of the biggest issues in marketing, alongside practical advice from the digital experts at Econsultancy.

    With a subscription to Marketing Week Premium you will get full access to:

    > World-renowned columnists

    > Analysis & case studies

    > Exclusive leading-edge insight

    > Carefully curated reports & briefings from Econsultancy

    > Plus, much more including a £300 discount for the Festival of Marketing

    Subscribe now

    Got a question?

    Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

    If you are looking for our Jobs site, please click here

    Subscribers enjoy unlimited access to unrivalled coverage of the biggest issues in marketing, alongside practical advice from the digital experts at Econsultancy.

    With a subscription to Marketing Week Premium you will get full access to:

    > World-renowned columnists

    > Analysis & case studies

    > Exclusive leading-edge insight

    > Carefully curated reports & briefings from Econsultancy

    > Plus, much more including a £300 discount for the Festival of Marketing

    Subscribe now