Cracking Christmas

Last year, according to Mintel, UK shoppers spent £875m on Christmas food. The research company revealed what we all know – that people like to treat friends and family at Christmas. So that means premium food and lots of presents. Of course, things may be a little different this year. The credit crunch may curb spending, but you can bet that even if people cut down on the amount they spend on presents, they’ll still splash out on food and drink. The key for all convenience store retailers is, of course, to get their hands on some of that spend. Julie McAulay, retail operations director at Spar wholesaler James Hall, realises this, which is why she introduced a Christmas Planner for her store managers. “This will be the third year that we’ve used the Christmas Planner and our guys find it invaluable,” she says. “It’s been a Christmas godsend. Managers can get bombarded with information at this time of year so I set up the Planner using the Microsoft Outlook calendar. Every day there’s a reminder about critical activities and deadlines. It covers everything from products, to confirming staff rotas, to ordering change. Entries on the calendar include the last day for ordering stamps, for example. It’s not rocket science; it’s a simple document but it really works. And it’s great because managers don’t work all day, every day, so when it’s their day off, their deputy can look at the planner and see what has to be done.” Christmas planning started months ago for James Hall. “Key suppliers have already presented their Christmas ranges. For example, we ordered Christmas confectionery in June and we’re raising orders for beers, wines and spirits now,” says McAulay. She adds that Christmas lines go out on display as soon as possible after Halloween. “We encourage stores to produce a Christmas product plan before they confirm orders. And we’ve created specially-designated seasonal space in our stores to eliminate the amount of hazardous stacks and dumpbins. That’s a bit of a challenge for convenience retailers – maximising in-store space while at the same time minimising ‘clutter’.” Mike Greene, chief executive officer at research company HIM, agrees with McAulay on timing, saying that retailers should not put out their seasonal fare until after November 5. “There’s too much ‘noise’ in store before then, which creates consumer confusion. November 6 is early enough for customers to get a good level of awareness about what’s available.” And he says retailers shouldn’t panic if products are still left unsold two weeks before Christmas. “You’ve got to remember that many people leave the shopping until the last few weeks – and for many men, the last few days.” Retailers are often advised to look at last year’s sales patterns and base their orders for this year on them. However, Greene says they need to consider other factors too. “There’s the economy as well as the changing tastes of customers. For instance, in recent years premium and higher priced gifts and confectionery have featured well and have often sold out first. But many retailers missed the opportunity to sell more of the expensive wines and gifts and the more premium confectionery because they didn’t have the courage to order more.” Greene encourages retailers to be brave and stock up on premium goods. “This year may be a different story with the credit crunch, but I would urge retailers not to over-react by only focusing on the cheaper or mainstream lines. I would recommend that they look for some points of difference that are harder for the supermarkets to run. Hampers that include local products might be a good idea.” One of the big questions for retailers is whether to have one ‘all singing, all dancing’ Christmas display with all the products together, or whether to put the seasonal lines in with the year-round sellers. Greene says go for both: “Stores should have impactful displays but they should also use the category displays that customers are visiting for their day-to-day purchases to prompt seasonal sales of lines related to that category.” Meanwhile, James Hall, controller of Bestway symbol group Best-one, reckons planning ahead for Christmas is never done early enough. “I’d recommend that retailers take a good look at their store as it stands now and think about making a special area that could be dedicated to a Christmas display of products that all – or most – consumers might want to buy. They need to make sure there are some luxury items included, like special chocolates and Champagne, that might make presents for friends or neighbours.” And don’t forget the window display, he adds. “Try something dramatic to draw people into the shop.”
Sweet talk
Confectionery, and in particular chocolate, is a big seller at Christmas. Nisa-Today’s Central Distribution Service trading business manager David Stokes says Christmas planning for this category starts way back in the first week of January. “Retailers review their business over the previous two months and make notes on all the winners and losers, then put down their thoughts for the coming year. This covers not only the ranges sold, but the space given to the products and any consumer feedback they’ve received. “Confectionery sales are buoyant all year round, but when Christmas products start to become available retailers need to get in early. We recommend they start displaying Christmas confectionery from the first week of October, but every retailer has to make their own decision on what extra floor space they can give.” Stokes reckons confectionery gift boxes are bought early by the price-conscious consumer who is spreading their spending across a few weeks. “Tins of sweets often get bought early but sometimes they get eaten early too, so a second purchase has to be made before Christmas. Retailers can only get that sale if they’ve displayed the product.” When it comes to finding space for all these lines, Stokes says retailers need to check their whole shop to ensure old displays are cleared. “Barbecue items and outdoor activity products can sometimes get overlooked. Retailers also need to check that all the manufacturers’ stands they have are earning their space because festive products are a big sales opportunity and they don’t want to miss out.”
Snack happy
According to TNS Worldpanel figures, the average shopper spends nearly £100 on Christmas snacking products. United Biscuits UK commercial manager Nick Stuart says it’s essential, therefore, for retailers to plan ahead to ensure they capture the Christmas sales early and enjoy repeat purchases. “We suggest creating a Christmas display in mid-October and then, as Christmas draws closer, increasing space allocation.” And he says retailers are missing a trick if they don’t create a dedicated display area. “Customers may well see a range of seasonal biscuits that they will buy, but it’s possible they could get distracted on their way to finding the crisps, nuts or cakes that are part of the rest of their Christmas shop and seek these products elsewhere.” And it seems the ‘eating the Christmas treats before Christmas’ scenario that Nisa’s Stokes alluded to with tins of sweets is repeated with snacks. Stuart explains: “It’s important for retailers to run price promotions, as the earlier they stock the product, the more likely their customers are to see, purchase and, crucially, consume it before the festive period. This produces repeat sales opportunities. Early-bird promotions should ideally start in October, to capture the people who like to do their Christmas shopping early. Different price promotions should run in November – presenting customers with further reasons to carry out multiple shopping trips and, in turn, boost retailers’ profits.”
The right offer
Of course, the likes of Tesco, Sainsbury’s and Asda will all be promoting like crazy in the run up to Christmas, but what about c-stores? Do they need to as well? James Hall’s McAulay says that value messages are just as critical at this time of year as at other times. However, HIM’s Greene says: “Yes, run promotions but don’t feel you need to give the products away.” It’s a similar message from suppliers. Anchor Foods spokeswoman Hannah Acres says: “We don’t believe it’s worthwhile doing money off in December as people will buy our aerosol cream anyway, plus they’re willing to spend a bit more at this time of year so price promotions are really just giving money away.” Britvic sales director Andrew Richards says it’s important for c-stores to strike a balance. “They need to be competitive with large grocery stores, but not disregard the opportunity that distress shopping provides. Most consumers will go to a large grocery store for the ‘big Christmas shop’, utilising convenience stores for top-up shops and last-minute distress or emergency shops – the essential and last-minute nature of these visits allows convenience stores the opportunity to increase profit margins.”
back to basics
Wiseman Dairies sales and marketing director Sandy Wilkie describes the period around Christmas as ‘volatile’ in terms of demand for milk. “The large multiple retailers experience a significant spike in demand the week before Christmas, usually followed by a trough and then another spike around New Year. The convenience sector should have opportunities during the trough around Christmas to satisfy demand for milk and cream in particular. More predictable, however, is the spike in demand for cream which can be as large as five to seven times that during an average week through the year.” Wilkie says that consumers will not necessarily be trading up at Christmas but they may alter their buying habits and consider products such as extended shelf-life milk. Not surprisingly, he says the most critical factor over the Christmas period is availability. “A customer who comes looking for milk or cream will almost certainly buy it if it’s available. This makes Christmas a period of significant opportunity for retailers to capitalise on what will definitely be a driver of footfall over this period, but planning the ordering is key. “Consideration could also be given to allowing more space for milk and cream in the chiller cabinet to ensure a full range is on display at all times over the Christmas period.” Anchor recommends c-stores start displaying their brandy butter and cream in early to mid-November – in fact, as soon as the complementary products like mince pies and Christmas puddings become available. Like milk, bread is something no household likes to run out of at any time of year, but particularly not at Christmas when many people will want turkey sandwiches for tea. “A shopping trip is often prompted by running out of bread and with an increase in the number of eating occasions during the Christmas period, it’s a particularly important category for convenience retailers to focus on and get right,” says Warburtons category director Sarah Miskell. Britvic’s Richards believes Christmas provides retailers with a fantastic opportunity to capitalise on soft drinks sales, particularly in terms of products offering the largest profit margins. These include premium drinks, such as J2O, which according to AC Nielsen, enjoyed a 10% increase in value sales leading up to Christmas 2007. “Our research shows that while consumers are buying more soft drinks over Christmas, they are also willing to spend more on them. People tend to ‘trade up’ at Christmas, buying what they perceive as indulgent and premium quality drinks to satisfy their individual needs or even to impress their guests. In fact, research shows that 70% of consumers feel that it’s worth spending a little extra for a quality product around Christmas time.”