New Study Outlines Where Opportunities May Lie For Food Retailers This Christmas

New consumer research by data and digital specialist TWC looks at what is happening in the run-up to Christmas 2020 across the UK economy and outlines some positives for retailers.

And whilst the ongoing uncertainty around Covid-19 and Brexit looks set to impact on Christmas 2020, there are slivers of light – alongside the potential for new income streams for retailers, which TWC has looked to highlight and bring to the fore.

Figures taken across 1,052 consumers interviewed in the last week showed a picture emerging of a reluctance to spend this Christmas – in many cases with spend almost halving across elements such as treats, food consumption at home over the festive period, and Christmas lunch itself compared to ‘normal’ years.

Nevertheless, 28% of people plan to entertain friends and family at home this year. In previous years, 33% of those asked confirmed they had headed out to a local pub and eaten out over the Christmas period, but 2020 sees a lower number of people intending to eat out with 1 in 7 saying they are currently looking to go out to a pub or restaurant across the festive holiday.

There are notable gains across the Convenience channel with 84% of consumers surveyed saying they will use their local c-store this Christmas, and 47% saying they had continued to use their local store more, even after the Covid restrictions had been lifted.

26% of consumers said they would probably use home delivery / click & collect from their local c-store this year and 28% stated that they intend to use their local c-store more for food & drink shopping over Christmas.

Tom Fender, Development Director for TWC said that this is time for retailers to move fast to take advantage of changes in consumer buying behaviour: “For those retailers who are agile and nimble there are many opportunities, and with consumers starting their shopping now (38% of consumers have started buying Christmas presents already, and 19% have started buying food ahead of Christmas) – our advice would be to get ahead fast, and commence Christmas trading urgently (if not already), as we are seeing a window of opportunity ‘in the moment’.

“We know that people are looking for premium items, they are looking for hampers, and they are increasingly turning to home delivery services (or click & collect) to support their buying needs.

“But the study suggests that consumers don’t see convenience stores as a fully credible place to go and buy Christmas foods from. This is a missed opportunity/marketing opportunity. In fact, almost 50% of the nation (30 million consumers) specifically say they would be interested in buying Christmas food and drinks from local convenience stores if they sold them.

“Trading up to more premium lines is another important point. It’s a real area of opportunity for retailers with 23% of consumers saying they intend to ‘splash out’ and treat themselves this Christmas.

“Yet when it comes to trading up – our data showed that ‘premium’ truly means premium.  Too often retailers think that premium means ‘a little bit better’ but a clear opportunity exists to push the boat out and go ‘luxury’. Retailers are ideally placed to encourage their customers to consider those luxury items and look to upsell through the store.”

Fender also reminded retailers on “doing the basics well” and says this will be vitally important as we approach the important Christmas trading period in a backdrop of economic recession:

“This means ensuring availability, removing slow-moving lines and giving prominence to best- selling lines, and is where retailers can turn to their wholesalers to give a helping hand with advice around how to upsell with luxury goods, and encouraging cross-purchase wherever possible”.

TWC’s ‘A Look at Christmas in 2020’ also showed that people are worried about food shortages in shops with 25% saying they had a concern due to Covid-19, backed up by 22% who were worried about Brexit shortages.

Fender commented: “As highlighted earlier, 19% of consumers admit they have started to stock up on food, drink and household items just in case there are shortages on the way.  Equally, we know that wholesalers have made good contingency plans and are forecasting almost daily to ensure that shelves don’t fall empty and the government has been clear that it supports fair distribution to all.

“Whilst our macro findings regrettably paint a somewhat gloomy picture this Christmas, economic factors will be largely determined by Government policy – for example if restrictions are lifted, convenience stores and local shopping will gain. More people are saying they won’t go out due to the likely government restrictions (rather than for financial pressure) and therefore the opportunity is there for retailers to fill the gap.

“Our figures have also showed that 10% of consumers have (or are) considering going to a local food bank and its sad fact that this year the number of people who do not intend to celebrate Christmas in any way at all, has quadrupled to 12% of those asked.

“Knowing your customer is going to make a big difference to retailers this year, as consumer spending and buying patterns have already changed and Christmas trading has already commenced.

“Don’t forget the growing importance of data and what this can tell you about changing trends. Wholesale shipment data and supplier sales data will be fast giving visibility of what is happening and has a key role in guiding retailers with advice and support to help them ‘make more possible’ this year.”

NAM Implications:
  • Lockdown 2 may limit the opportunities…
  • …and continuous uncertainty re government actions may limit ‘long term’ planning by consumers and retailers.
  • That said we are in a rapidly changing retail environment, accustomed to optimising new opportunities.
  • So, be prepared for the unexpected…