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Christmas 2018

Naughty & nice learnings from 2017 for 2018 success

Christmas may only have been a few sleeps ago but as thoughts now turn to the 2018 festive season, what learnings can help to maximise success?

In 2017, Christmas retail success or failure was dependent on tapping into key shopper trends and executing against these with single mindedness. Those using this approach found some lucrative gifts in their stockings, helping them to accelerate away from their competitors.

With all this in mind, how can you get it right at Christmas 2018? This report identifies some key learnings to act as thought starters for a successful 2018 festive season.

At a glance: Predictions for Christmas 2018

Continuing themes:

  • Own Brand Innovations
  • Lifestyle Brands
  • Digital Channels

Accelerating themes:

  • Microsegments
  • Partnerships and collaboration

Emerging themes:

  • The circular economy
  • Subscription models
  • Lifestyle models
  • In-store experience

1. How to capitalise on the continued practical gifting trend?

Lower Christmas 2017 consumer confidence meant shoppers turned to what they needed, not what they wanted: After steady growth from March 2014, household income declined by 1.5% in November as a result of 3% inflation vs. 2.5% earnings growth. This caused a move towards pragmatic gifts like home accessories, kids clothing and electricals and away from categories like wearables, beauty, toys, jewellery and watches. In this environment the savvy shopper enjoyed continuing their love affair with the value players who both grew and gained share of wallet, buoyed by sales of luxury products, like champagne.

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"Lower consumer confidence meant shoppers turned to what they needed, not what they wanted"

2. How to maximize Self-Treating sales?

"We are a nation of Self-Treaters”

Whilst gifting may have turned practical, shoppers are increasingly spending more on treating themselves through experiences or products. Christmas is one of the key self treating occasions of the year and food is an increasingly important way to do this. Despite lower levels of consumer confidence, consumers spent an estimated £500m more on food versus 2016. Our research showed food is a key seasonal priority for shoppers with an emphasis on festive treats and Christmas dinner.

Non-food struggled over the last 3 months of the year, with implied volume declines of 0.3% year on year. November was a game of two halves - initial negative growth followed by some recovery through Black Friday promotions, driven by on-line. Our research shows Black Friday purchasing is driven by self-reward, not gifting - Men in particular are buying here, with a real focus on electricals. Black Friday promotions look set to stay and appear to have changed the shape of sales across the full Christmas period, with a negative impact on traditional post Christmas sales.

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3. How to use entry pricing to attract shoppers and innovation to trade them up?

In 2017 shoppers remained much more loyal to their store of choice than in previous years. Instead they flexed across different range hierarchies in their store of choice – coming into store in response to competitive entry point pricing and then trading up across expanded Own Brand ranges. Grocery retailer focus on Own Brand innovation, particularly in their top tier generated strong growth and meant The Big Four grocery retailers grew their share of wallet. This year too there were more brand partnerships and collaborations to drive differentiation and add value - Look at brand mash-ups like Disney and Cath Kidson.

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"Shopper preference is to remain loyal to their store of choice"

4. How can the bricks and mortar experience rival the ease and convenience of on-line?

"The march of on-line continues with direct to consumer businesses increasing"

On-line shopping experiences are improving and this shows in sales. Greater reliability of deliveries boosted shopper confidence and drove growth, whilst footfall on the High Street fell by 1% p.a. Clothing is a key example of the power of on-line – sales grew in this channel but were down in bricks and mortar. Subscription models like Harry’s, Hawkes & Stephen shirts, Glossy Box and Amazon subscribe and save models are beginning to gain impetus in the direct to consumer race. Personal styling models that make looking and feeling good effortless Like The Thread, Trunk Club, Stich Fix are also on the rise. Shoppers are looking for greater price transparency, ease of shop, time saving and inspiration as well as the convenience of next day delivery.

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5. How to capitalise on any microsegment opportunities at appropriate cost level?

Activity over the last half of the year saw a cautious move away from mass targeting and into celebration of diversity. M&S launched their Curve Collection with a plus-size focus and Tommy Hilfiger offered an adaptive fashion range for those with disabilities. As the environment becomes more difficult, identifying what some, not all, of your consumer base need and giving it to them could be a clever way to drive share. 

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"Mass market AND microsegments offer an opportunity for growth"

6. How to encourage demographics with lower consumer confidence levels to have the confidence to engage?

"It's not all about Millenials"

Millennials may have become the new normal but spare a thought for the lower socio-demographics and the over 55’s+ who show increasingly low levels of consumer confidence. A,B C1 confidence has also declined significantly versus last year, whilst the squeezed middle has stabilised. Retailers and brands with a high proportion of these shoppers need to be thinking how they can persuade nervous shoppers to engage and demonstrate great value.

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7. How to effectively embrace the end to end sustainability model to increase brand engagement?

History shows that in times of economic uncertainty sustainability drops to the bottom of the shopper decision hierarchy. This has started to shift and it remains important to shoppers, regardless of pressure upon disposable income. The millennial pound is a key influencer here, but programmes like Blue Planet and the resultant plastics issue have captured the collective imagination and pushed sustainability higher in shopper consideration. This and the increasing desire to invest in experience, not things has driven us into a new phase - The circular economy, focusing on reduce, reuse and recycle.

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"Sustainability has captured consumers’ imagination like never before"

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Lisa Hooker

Lisa Hooker

UK Consumer Goods Leader, PwC United Kingdom

Tel: +44 (0)7802 882562

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