Given the other horrors in our economy, the UK retail sector has proved remarkably resilient at Christmas in the last couple of years, as consumers do their level best to forget their troubles and enjoy themselves with friends and family. As always, you can bet your turkey dinner it’s going to be a big business opportunity, but this time round could be even bigger.
The 4 January 2011 VAT increase from 17.5% to 20% is expected to hit all income groups hard. Depending who you ask, there are concerns that it could go on to stoke inflation, cause cash flow problems, push some businesses into insolvency and trigger higher interest rates.
But before all that, we can expect the VAT hike to lead to a spending spike this Christmas. Canny shoppers will behave like they always do and bring forward their planned spend on white goods and big ticket items into the pre-Christmas period, to beat the rise. Taking out these windfall sales, Christmas remains good business year in year out for our big retailers. Here in the UK, we certainly believe in cheering ourselves up at Christmas: people cut back and detox in the New Year, but before that we like to splash out.
Christmas is an all-important selling period for a number of grocery sectors for which gifting and entertaining are primary reasons to purchase at this time of year. This is particularly true of confectionery, drinks, stationery and toiletries, whose leading suppliers have been working with major retailers to develop eye catching ‘in store theatre’ for the past few decades.
Who stocks wins – and especially so at Christmas. Impulse purchase is everything. Male consumers of all ages are notorious for leaving their Christmas shopping until the last minute, then rushing to their local supermarket. Now with the Internet they don’t even need to make the journey, but getting the goods unseen into the house before the big day might pose a challenge…
Next question, when should you roll out the Christmas displays? The big department stores open seriously early for Christmas, and probably launched their festive lines for 2010 in mid-August. Admirable in terms of enthusiasm, but probably too early for most shoppers to cope with. According to one major confectionery supplier, Christmas is ready to launch in November as soon as the Halloween and Bonfire Night displays have finished, which sounds more reasonable.
We’ll be bringing you more news of Christmas products and promotions in The Grocery Trader between now and December. Keep reading!
The Grocery Trader