Noel way out? Making a credit crunch Christmas work to your advantage

Awhopping £2.2bn was spent in the convenience sector in the four weeks to December 29 last year, up 2.4% from the same period in 2006. And the good news is that retailers look set to profit even more this year. While other retail industry sectors are struggling in the economic slowdown, there are many who believe that convenience stores can benefit. Among them is Stewart Samuel, a convenience sector expert at IGD. “The economic downturn could actually be a positive thing for convenience stores,” he says. “They can benefit from the growing consumer desire to save on fuel and shop more locally.”

However, the squeeze on consumer spending is likely to have an impact on the kinds of products that shoppers plan to buy this festive season. According to Helen Roberts, retail director at research consultancy GfK NOP, shoppers are planning to cut back on decorations and spend less on presents this year. However, they are planning to spend the same amount on food and drink. So, what to stock and what not to? Well, IGD’s Samuel believes that it’s important c-store retailers don’t go overboard with festive stock. “It sounds a little strange, but the important thing to remember at Christmas is not to be too Christmassy,” he says. “For example, don’t fill your chest freezer with a large haul of frozen turkeys, as most shoppers will do their main Christmas grocery shop in a supermarket. What c-store retailers should focus on are distress purchases; the little things such as cream and batteries that people forget to buy.” Mincemeat, biscuits, chocolate confectionery, nuts, pastry, light bulbs, tonic water and flour are other commonly forgotten but vitally important festive products that retailers would do well to stock up on this year. The fact that most of these items also have a long shelf life is an added bonus. It might also be a good idea to buy in a few extra packs of medicines for tummy troubles. According to TNS Worldpanel Data, 28% of all upset stomach and 26% of indigestion remedies are bought during the festive season.

Last, but certainly not least, are greetings cards. Just under 50% of shoppers purchase cards for friends and family from convenience stores, according to research by HIM.

Drink up

Christmas is a real boom time for soft drinks as people attend more parties and gatherings within a home environment than at any other time in the year.

Soft drinks sales rose to £119m during last year's festive season, up 4% on the previous year, according to research by Britvic. Sales director Andrew Richards explains: "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 indulgent and premium quality drinks to satisfy their individual needs or impress their guests. In fact, 70% of consumers feel it's worth spending a little extra for a quality product."

Richards adds that to exploit this high-profit period, retailers should stock and display key sellers while also offering money-off specials or linked sales with other entertainment-allied products such as premium crisps. Dedicating space to adult drinks and larger pack formats is also a good idea.

Promotions are key at this time, and a number of big-name brands are launching offers so hot as to melt even the coldest consumer hearts. J20 has an on-pack promotion in which consumers will be able to win tickets to an exclusive gig by a leading UK comedian, while Coca-Cola offers prizes and rewards via the 'Coke Zone' website. Prizes will include high-tech gadgets, party shoes, VIP tickets and money-off vouchers for leading retailers.

To go with those drinks, in the snacks category UBUK is adding new products and revamping existing products for the season. In the McCoy's range are two new limited-edition products: Winter Warmers McCoy's in lamb & mint and steak & ale pie. And the Hula Hoops range introduces another shaped format: Stars & Hoops Sharing Drum.

The KP range is targeting the luxury market with Nuts Pouches available in two flavours: frosted maple syrup and frosted vanilla & cinnamon. KP has also brought back the 20% extra-weight nuts (360g/600g), and the Christmas and KP sharing drums are now resealable.

Walkers has already got into the festive spirit with its £1m Winter Windfall on-pack promotion which runs through to the end of January next year. The promotion is running across Sensations 40g packs and offers consumers the chance to win prizes including breaks to the Ice Hotel in Sweden, shopping trips to New York, TVs, laptops and thousands of vouchers for HMV and House of Fraser.

A barrel of laughs

According to UBUK, 98% of UK households buy biscuits over Christmas, making it an important category for retailers to get right. UBUK commercial manager Nick Stuart says that retailers should increase their offering with tins and premium biscuits while keeping their existing stock up to scratch. “One of the beauties of Christmas is that nearly all sales of assortments and premium biscuits are incremental sales. There’s a clear shift to the more premium end and Victoria sees huge sales at Christmas as people look for gifting. But at the same time Family Circle still sells in huge volumes and items such as The Jaffa Yard don’t hit sales of Jaffa Cakes.” Stuart says retailers should be looking at a minimum of a metre run of biscuits at Christmas just to show the range, and in the last few days should be really promoting assortments. “You should consider moving the display almost under people’s noses on the 23rd, 24th and 25th so they can’t miss them. There is the usual panic in the last few days and before New Year when people are off to see their families and want to take something with them.”

This season UBUK has several new biscuit lines and formats: McVitie’s Shortbread Bites in a sharing carton; McVitie’s Mini Tubs now in a sharing format with four variants of Mini Chocolate Digestives, Mini Jaffa Cakes, Mini Cookies and Mini Mallows; and McVitie’s Jestivals, a chocolate assortment. Family Circle, Tea Time, Victoria, Temptation, Classic Collection and Masterpieces all come in new pack designs. From Burton’s come two new products in the novelty and premium categories. The company is following up last year’s Cadbury Santa’s Festive Friends with the Cadbury’s Ark 250g tin full of mini Cadbury’s animal biscuits. In the Green & Black’s range it launches Traditional Organic Shortbread Tube in a 200g tube. Getting chilly Ice cream is also a big seller at Christmas. According to General Mills UK sales director Andy Foweather, the season remains a key selling period for luxury ice cream: “Christmas is a time when consumers will naturally be looking to trade up and treat themselves.”

Foweather says that c-stores are well positioned to see profitability in this area, but they could be doing better: “Last Christmas convenience stores experienced a 35% increase in base sales of luxury ice cream. The major multiples experienced a more pronounced uplift last Christmas, benefiting more from seasonal sales, but that’s the case in many product categories.” He says that c-stores need to look at merchandising and space allocation: “Potentially, some retailers may not be allocating sufficient freezer space to the luxury ice cream category over the winter period. Also, retailers should ensure that they are not simply placing a blanket order on ice cream year-round; certain flavours are more suited to the winter season.” As part of Häagen-Dazs’ winter range General Mills has launched its limited-edition caramel biscuit & cream. The company will also be offering promotional activity on Häagen-Dazs to support the convenience sector and will be airing a national TV campaign in November as part of the £5m marketing support package in 2008. From Unilever, Carte D’Or has added new winter flavour dulche de leche, which features caramel ice cream with caramel sauce. The Carte D’Or brand is being supported with a press campaign featuring the chocolate inspiration and vanilla variants in women’s magazines, which focuses on winter eating occasions. The campaign will run until the end of next month.

Stocking advice

The festive season allows retailers the opportunity to be a bit more adventurous with their buying and try out new products, but be warned. Value for money will be more important than ever this year as shoppers try to keep control of their spending.

Promotions will definitely motivate shoppers this season, and products that are affordable but with a premium edge are likely winners.

Meanwhile, higher priced ethical products look likely to lose out. In a recent study by retail research company Gfk NOP, 75% of shoppers said they wouldn't be buying more ethical products in the run-up to Christmas for financial reasons.

Once you've got all your festive goodies sorted the next thing to tackle is where to merchandise them. If you have the space, a special Christmas stand can be effective. It's also a good idea to cross-promote party essentials such as drinks with crisps and confectionery to really maximise sales.

Gifting items such as boxed chocolates, confectionery and cards should also be highly visible to catch the shopper's eye.