Christmas is always a time to rejoice and consumers’ appetite to spend during the festivities seems unabated.
By Elena Dimama
Gifting and sharing remain important festive traditions, despite the cost-of-living crisis, as consumers look for cost-effective ways to provide indulgent treats to loved ones.
It’s undeniable that the ongoing cost-of-living crisis is putting an extra strain on incomes; however, Christmas is a special occasion for which shoppers are saving up to spend in the run-up to it.
The trend should mean an extra way for independent retailers to drive margins in different categories during what is already the busiest time of the year. According to GlobalData, food and grocery are expected to grow faster than other categories this year, with shoppers spending £2.8bn (or 5.9%) more through the fourth quarter of 2023 than they did last year.
“This year GlobalData expects a record number of shoppers to shop at discounters as their keen pricing and strong seasonal offers attract high levels of footfall,” Nick Gladding, Lead Retail Analyst at GlobalData, explains.
As is to be expected, the confectionery sector in particular sees a surge in sales during the holidays, with key shopper trends revolving around gifting, chocolate, festive sweets and advent calendars.
In fact, the confectionery category was worth over £2bn during Christmas 2022, according to IRI, with 97% of UK households buying confectionery in the run-up to Christmas, spending an average of £55 per person over the season, according to Kantar. Chocolate continues to dominate sales ahead of the big day, worth more than £1.65bn and growing 4.7% on last year, according to IRI.
“During Christmas, the convenience sector experiences a surge in foot traffic and consumer spending, making it one of the biggest shopping holidays of the year,” Kathryn Hague, Head of Marketing at Hancocks, notes.
“With the cost of living, many households are looking to cut costs during the festive season. However, independent retailers have an advantage over big supermarket chains, as they typically offer more affordable prices.”
Andy Mutton, Managing Director, Storck UK, adds: “Whilst budgets will certainly be tighter for many, we know that consumers will try to save as much as possible in order to purchase gifts for their loved ones and even treat themselves as the year draws to a close.
“The confectionery category is in a good place when it comes to seasonal sales, with sharing boxes, sweets and chocolate seen as affordable indulgences that can bring comforting and familiar joy to festive occasions.”
Affordable treats could be the key to unlocking additional sales this Christmas when impulse occasions rise but recessionary conditions still prevail. According to Mintel, 62% of shoppers view having snacks in the evenings as an affordable treat, and that’s when the Crisps, Snacks and Nuts (CSN) category comes to the fore.
“Christmas sees an increase in Sharing occasions, from festive movie nights with family to get-togethers with friends,” Matt Collins, Trading Director at KP Snacks, notes.
“Sharing is the largest segment in CSN, worth £1.6billion and experiencing a 74% increase in packs bought over Christmas versus the rest of the year. Retailers should capitalise on the growth of Sharing over Christmas by stocking larger formats to tempt and engage shoppers.”
Meanwhile, over the festive season, shoppers are willing to spend more on higher quality CSN products to bring extra flavour and excitement to Christmas occasions.
“To drive sales and capitalise on this trend, retailers should broaden their product range in the lead up to Christmas to include more premium options,” Collins adds.
Quench the thirst
Energy is a crucial category to deliver value at Christmas, accounting for 17% of all soft drinks sales over the period. Catering to larger group occasions could also be key to unlocking higher margins this Christmas; according to Kantar Worldpanel, 24% of Sports and Energy occasions over the festive period featured five or more people – 14.6% more than over the rest of the year.
“Christmas is also a key time for shoppers to experiment with flavours, last year just under one-third of Red Bull shoppers bought a Red Bull Edition flavoured Energy Drink over Christmas (+1pts vs the rest of the year),” Red Bull tells SLR.
“Offering more choice to shoppers, Red Bull has unveiled its first ever limited Red Bull Winter Edition to the UK. The launch of the first ever Red Bull Winter Edition Spiced Pear aims to push this further by removing the taste barrier and tapping into the growing trend of flavoured Energy Drinks – presenting a compelling opportunity to reach more consumers.”
Traditional soft drinks staples are still expected to play a dominant role at this year’s Christmas occasions. “To make the festive season sparkle, stores need to stock up on colas, mixers and adult soft drinks in sharing formats for the growing number of social occasions. Retailers should focus on leading brands like Coca-Cola, including Coca-Cola Zero Sugar (growing in value and volume in convenience),” Amy Burgess, Senior Trade Communications Manager at Coca-Cola Europacific Partners, notes.