The Great White Lie We Tell Ourselves
That time of year has come around again, selecting advent calendars, dusting off your decorations, and reading often conflicting articles debating 2024’s most impactful Christmas ads and the outlook for consumer spending.
I’m struggling to recall the last time that I read a consumer outlook report that predicted that shoppers expected to splurge and spend more around Christmas, with last year’s YouGov survey which found that more than half had planned to cut back in 2023 being a typical example. However, examining the performance of c. 700 of the UK’s leading online and offline retailers in December last year reveals the age-old conflict between intention and action.
Whilst consumers may have intended to cut back, we found that in reality retailers proved effective once again in encouraging shoppers to open their wallets with retail sales revenue growing +10.6% in December versus 2022. This finding was a consistent experience across income segments, with those consumers in the £30 – £60k income brackets particularly splurging last year. This isn’t simply the impact of rising costs and inflation as this growth was driven by the surge in the number of transactions which outpaced revenue at +11.1%. This may indicate a greater focus on the volume of presents and gifts under the tree, and the ability of advertising and in-store merchandising to stimulate that ‘just one more thing’ mindset.
So my gift for Christmas is optimism. I appreciate it’s not exactly a Fortnum & Mason hamper, but the emotional and mindset drivers of the gulf between intention and action provide brands and marketers with a ripe opportunity to outperform in 2024.
That Christmassy Feeling
Whilst the run-up to Black Friday weekend drives up online’s share of sales every year, the Christmas period provides some respite from the relentless tide and a prime opportunity for brick-and-mortar retailers to strike back and remind people why they love the high street. This isn’t simply caused by shoppers missing the last delivery dates, as we find online retailers including Amazon, AO, Shein, and ASOS lagging behind their high street rivals and losing share in the first 2 weeks of December. In-person shopping must deliver something fundamental to the Christmas experience that makes consumers brave the crowds.
Examining the best-performing retailers can help to provide some insight and inspiration. In December the Department Stores are in full force with Selfridges, Harrods, John Lewis, and TK Maxx all seeing strong double, and even pushing triple-digit growth in retail sales. The premium department stores in particular are able to offer impactful in-store displays and experiences that can generate the Christmassy feeling, elevate the shopping journey, and embed themselves as a cornerstone of the seasonal calendar.
Whilst few will have the merchandising budgets to compete with these retailers, brands need to strive to deliver scalable activations that go beyond blaring Christmas songs from the speakers. This could include creating a multi-sensory Christmassy ambience with warm lighting, cosy spaces or festive scents, offering in-store exclusives or promotional nights including prizes, minimum spend goodies and gift wrapping, or leveraging the live social shopping capabilities of platforms like Tiktok to connect your stores with your broader omnichannel marketing. Curating the messaging of your in-store merchandising and social media content can help to break shoppers from their choice paralysis and get them to tick off another objective or add that perfect stocking filler to their baskets as TK Maxx do so successfully every year.
The Top 10 Fastest Growing Retailers in Christmas vs. Black Friday
Time For Connection
For UK consumers, Christmas provides the prime time for connection and social celebration, offering numerous occasions to gather with colleagues, friends, and family. In 2023, the out-of-home dining sector grew by +7.3% which was driven by full service restaurants as people seek out quality dining experiences over fast food or deliveries. There is a strong trend toward self-indulgence and treating loved ones, with mid-tier and high-end restaurants in particular seeing an impressive +26.6% growth, outpacing the broader out-of-home category. This opportunity goes beyond wining and dining, as consumers are increasingly drawn to experiences including live events, theatre, the cinema and competitive social venues like Flight Club and Swingers Golf, all of which see substantial seasonal boosts.
Both restaurants and retail have an opportunity to leverage a mutually beneficial relationship. For retailers, fine dining and unique social experiences serve as draws for an outing, which they can tap into by priming consumers ahead of time with targeted promotions or geo-targeted ads to encourage visits after shopping. Restaurants in turn offer shoppers a cosy respite from the bustling high street where they can recharge their batteries. Restaurants can seamlessly capture foot traffic by using dynamic geo-location targeting with creative displaying real-time availability of tables and directions, making it easier for shoppers to relax and dine on the go. Together, these sectors can create a holistic seasonal and convenient experience for holiday shoppers seeking festive connection.
All The Trimmings For The Perfect Christmas
In 2023, 67% of people expected to host over the Christmas period. This encumbers consumers with added pressure to provide the perfect Christmas, hunting down the plumpest Turkey, wine pairings and inclusive meal options that can cater for your vegetarian brother (yours truly) or gluten free aunt. Examining grocery shopping behaviour, it appears that consumers opt for the perceivable assurance of quality by trading up to the premium grocers, M&S and Waitrose, as well as the higher end members of the Big 4, Tesco and Sainsburys, who outpaced the discounter competition and grew their market share in December. This indicates that Aldi and Lidl still have a lot of work to do to ensure their lauded TV adverts and the star power of Kevin the Carrot translates into changing shopper behaviours. Demonstrating quality will be key to enable shoppers to buy with confidence and assure consumers that they can take pride in their Christmas fare.
Brands need not limit the opportunity to expectant hosts with an even greater proportion of us lucky shoppers expecting to be hosted by family or friends over the Christmas period. Whilst these shoppers may expect to spend less than their hosts, personalised calls to action can help brands to drive frequency and high value transactions. Brands can focus creative around their product ranges such as hampers, aperitifs, and wine that people can bring to ensure they can ‘be the #1 guest this Christmas’ and ‘get invited back next year’.
Grocery Retailer Growth in Christmas vs. Black Friday Period
Personalised Touches
Some people seem to naturally excel as gift givers, those who you can always trust to go the extra mile to get that special gift that speaks to you. Etsy has emerged as the perfect platform for one of a kind gifts whether eccentric, cute, practical or humorous and they were one of December’s strongest performers growing +39%. Their 2024 Where’s Wally inspired ad really provides that strong resonate messaging with ‘gifts that say I get you’, but this desire for unique gifts has multiple strands and is not limited to shoppers who can afford the premium of hand designed gifts.
An Oxfam sponsored study from last year found that 33% of Brits planned to give pre-loved items which was up markedly from the 25% in 2021.The contribution of Oxfam’s stores may go some way to explain their significant outperformance of charity peers seen over the Christmas period. Whether charity shops, Ebay, or Vinted, pre-loved is increasingly coming into focus in December as they provide a personal touch that can mirror the values of the gifter as well as the giftee.
The Panic Shopper
But in reality we can’t all be the thoughtful and organised shopper that we aspire to be. As the clock ticks down to closing time on the high street shoppers turn to Health & Beauty, Jewellery & Accessories, Bookshops and Department stores for redemption and those final gifts on the list. In 2024 it’s safe to assume that once again many of us will receive hastily wrapped books, bath and body gift sets, or cosy winter accessories. Retailers can execute for success by ensuring that their calls to action and merchandising in store reflect the motivations and emotions of these forlorn last minute shoppers and guide them to convenient solutions.
Retail Category Growth in the Final Days of Christmas Shopping
Retail Therapy or a Holiday From Your Holiday
Whilst shoppers can relax after ticking off their shopping lists for gifting, hosting, and feasting, there is still no rest for their wallets. Whether it’s the newfound wealth of payday or the windfalls from the much sought after gifts of cash, shopper spending on retail grew +17% in the boxing day sales as consumer mindsets shift from gifting to self-indulgence and this marks a final pinnacle for retail before priorities change in January.
The first week in January marks an important shift in the consumer focus as retail spend contracts -28%, an estimated £1.85bn. As the warming glow of Christmas fades, and the dark realities of a British winter set in, consumers dream of holiday escapes and increasingly direct spend to Travel which grew +53% in the first 2 weeks of the New Year. With spend on Travel quickly ramping up and exceeding £1bn a week on average through Q1, the late Christmas period will be key for brands to plant ideas, provide consumers with inspiration and ensure front of mind awareness.
So, What are 3 Things Brands Need to Consider for Christmas 2024?
- The say-do gap in holiday spending. The desire to create a perfect Christmas and spoil loved ones can lead to emotionally driven spending overcoming their intention to cut back. Brands that tap into this emotional side in-store and across omni-channel, drawing on the holiday connotations and gifting motivations, can help to stimulate the ‘just one more’ mindset.
- The power of in-store and the festive atmosphere. For many shoppers the visit to the high street is more than a box ticking exercise as they work through their shopping list. Whether it’s your existing footprint, pop-ups or concept stores, brands have a powerful physical medium to bring to life their Christmas campaigns which can boost sales in the short term whilst building brand affinity and Christmas connotations that can yield rewards in future years.
- Confident consumers and decision shortcuts. As the Christmas season ramps up shoppers feel the growing pressure, and driven by a sense of urgency they will increasingly depend on quick mental shortcuts rather than thoughtful decision making. Retailers can win by adapting their in-store merchandising and calls to action to reflect changing shopper mindsets and objectives, helping consumers overcome their decision paralysis and enable them to have confidence in choosing their brand.
How can Starcount help you reach these seasonal audiences?
Starcount specialises in building behavioural audiences for activation. Whether leveraging our clients 1st party data or using signals from our online and spend behaviours, we can locate and find the best audiences to target based on WHY they buy and their mindsets and motivations for purchasing. This means that you can build audience segments for the range of Seasonal shoppers, through a more holistic understanding of who your audiences are, and crucially have the ability to identify the best geos for you to target.
We can bring in a myriad of relevant metrics including overlaying spend related to your category, brand and competition, related interests and mindsets, or we can ingest your own 1st party data to help you create meaningful and impactful audience segmentations.
All of the audiences built within our Connect platform can be activated through a range of DSP platforms, including the Trade Desk, DV360, and Stackadapt, to ensure that your targeting evolves to reflect the changes in the in-market audiences.
Need help or want to discuss this further?
If you want to understand more about your brand’s audiences and performance during the holiday season, and how you can tap into this opportunity, please get in touch and we can arrange a call with our team!
Data periods:
- November (Black Friday period) = 05/11/2023 – 02/12/2023
- December (Christmas period) = 03/12/2023 – 30/12/2023
