Sunday, 6 November 2022
After 2 years of unpredictable Christmas periods, we had hoped Christmas 2022 would be about treating and huge celebrations. But the challenging economic situation means the cost of living crisis makes Christmas 2022 just as unpredictable as a COVID Christmas. So, what do we think will happen?
- Christmas will still be the biggest seasonal event for retail as per our eventing report. According to Kantar, consumers spend more (which is inevitable this year with price inflation), shop more, buy more and trade up during the festive period. And this is true even in times of economic uncertainty. During the 2008 recession grocery FMCG spend per household during December was 11% higher than the average of the 3 previous months. This is versus a more normal year (2019) which saw December 16% higher than the average of the 3 previous months (Kantar, FMCG Panel). Therefore, we can safely predict that Christmas 2022 will still see significant uplifts versus rest-of-year.
- Celebrations are likely to be bigger affairs this year as according to IGD just under half of consumers were still impacted by COVID-19 last year, despite restrictions having eased earlier in the year. The winter variant resulted in just under a third of shoppers (32%) stating the news of Omicron affected their celebrations and 27% claimed to have avoided making plans altogether due to the uncertainty of potential last-minute restrictions (IGD ShopperVista, Jan 22). This could positively impact larger roasting joints as we see a switch back to bigger sizes due to more people being present at the table, as well as wanting meals to stretch over more days.
- Despite spending more at Christmas versus rest of year, how a shopping basket looks this Christmas may differ due to challenging financial situations for many. It needs to be remembered that the fundamentals of a Christmas shop will remain due to tradition, but small tweaks may be made:
- Product switching – We are likely to see a shift to cheaper roasting joints, benefitting pork and chicken. But with a potential shortage of turkeys there is an opportunity for trade up to beef and lamb for some consumers who want a showstopping centre piece. Frozen options for both meat and dairy based desserts may also benefit from shoppers watching their budgets.
- Tier switching – Christmas is typically a time for trading up, and it still might be for some who can afford a Christmas blowout. But for many we will see trading down within tiers. For some there may be a mixture, with some choosing to trade up for certain aspects of the Christmas meal, such as desserts, but trade down in less obvious places, such as the cream to go with the dessert. Therefore, there is a role for all tiers to play in-store but we are likely to see standard and value tiers steal share this Christmas.
- Retailer switching – With tighter purse strings we predict discounters are likely to see the biggest gains. However, in previous years we have seen trade up to premium retailers, alongside other retailers, which will still be the case for some. Overall butchers may suffer as many will look to supermarkets for cheaper protein options.
- Seeking out deals – According to research agency Two Ears One Mouth, 53% of shoppers plan on making more of offers and price reductions in store to cope with the rising cost of living (Oct 22). Tactical support is therefore going to be essential for the meat and dairy category.
- Reducing basket size – If shoppers need to cut back in certain areas, they may do so by reducing non essentials or scaling back options. For some families this may mean pigs in blankets don’t feature on the plate, for others it may mean having fewer protein options on the table, or cheese options on the cheese board, or for others it may mean boxing day buffets are utilising leftovers instead of party food. There are many savvy options a consumer can take.
- Foodservice will be bigger than last year but as a discretionary spend it will still be significantly smaller than pre-covid, as many choose to celebrate by staying in rather than dining out. However, if consumers do go out to celebrate this may result in a trade up of meals within the market, with more treating benefitting a category like meat as it is typically the centre of Christmas themed meals.
- Lastly, it needs to be remembered that in the run up to the big day Christmas will be competing with the World Cup (dependent on how far England get) in-store and out-of-home. Watch this space for AHDB’s World Cup predictions which are going to be released in the next couple of weeks.
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