Christmas will be here before we know it and retailers are gearing up to make the most of what is normally their most profitable time of year. But with a recession looming, what can retailers do to ensure they don’t get left out in the cold, asks Katie Kilgallen.

As most retailers sit down to finalise their Christmas strategies this summer, they could be forgiven for fearing a high street full of scrooges come the festive season. The quarter often means the difference between profit and loss and there are fears it could be the last nail in the coffin for many.

However, Christmas won’t be cancelled and there are still clear opportunities. Food and other needs-driven categories are likely to continue to grow. The proportion of spend being generated online will no doubt balloon again and there is a lot that retailers can do to capture their share. Similarly, many retailers still think there are plenty of reasons to believe shoppers will pay full price in stores. And there will always be the inevitable Christmas fads to take advantage of.

The answer to just how magical the golden quarter will be is still largely in retailers’ hands.

In Stores

In contrast to online, Christmas on the high street is arriving later and later. The reason, according to Graham Bishop, retail team leader at innovation consultant What If and former Woolworths marketing director, is that customers are getting smarter. “We’ve trained behaviours in them that are reinforced year after year. First up, if you want to save money at Christmas, sit on the sidelines and wait for the retailers to feel the pain. They’ll drop their prices and you can shop ’til you drop on Christmas Eve,” he says.
Bishop adds that, this year, retailers need to adopt new strategies and work hard to tempt customers back into stores, buying products at full price, throughout the festive period. “The answer is to offer a more valuable experience, giving customers more reasons to come into store and spend time with you, other than the fact that you’re stocking a product they may want to buy,” he explains.
Deloitte strategic adviser Richard Hyman warns retailers not to rush to discount, because consumers won’t respond to it as well as you may expect. “This is a climate when you see a lot of discounting – that’s not right. It assumes that if you lower the price of something people will want it, but shoppers will be reprioritising and changing behaviour. Doing without will be a decision at almost any price,” he says.

Make the most of your stores

  • Be unique Price is just one of a number of customer-offer levers that you can pull to win shoppers’ custom. What are you doing in-store that your competitors aren’t?

  • Don’t just offer value – become more valuableSourcing gifts is only one of many headaches that your customer faces this Christmas. Think about what else you can do to win their hearts.

  • Show you’re on their sideFestive bills are getting bigger every year, so the pressure is growing to deliver the perfect Christmas in every household in the UK. Show how you are using your scale and power to fight for best value on behalf of your customers.

  • Invest to get the best. It’s vital for retailers to recruit the best temporary staff to not only perform the usual roles, but also get out there on the shopfloor and help sell.

Source: What If Innovation

Online

One trend you can be certain of is that, whatever the overall spend, the proportion of it that goes online will be bigger again this year. In addition to being time-poor, consumers are painfully aware of the rising fuel costs and environmental impact of leaping in their cars to go shopping. This could present an opportunity for many retailers to offset the risk of losing custom in the downturn by upping their game online.

Janet Grimes, planning director at creative digital agency GT, says: “People will be prepared and purposeful this year and will have a budget to work within.” Likewise, Steve Lomax, managing director of online marketing solutions provider Experian Cheetah Mail Europe, says customers will be organised and looking online early to ensure they are shopping smartly. “We expect to see massive spikes in searches for Sales, discounts and vouchers. People will be online in October looking for these,” he says.

E-mail marketing will be key to take advantage of this, explains Lomax. “The importance of e-mail is increasing each year,” he says. According to Experian Cheetah Mail, the statistics show that, in terms of volume, the number of marketing e-mails sent out by retailers doubled last year. It was also the first year that online marketing activity from traditional bricks-and-mortar retailers outstripped that of online-only players. “The main high street retailers have really bought into it,” says Lomax. He estimates that the percentage of marketing spend devoted to Christmas online marketing can only increase. “There are two reasons it will get bigger,” he says. “They know it works and it’s cost-effective.”

But, with increasingly sophisticated, demanding and web-savvy consumers, blanket e-mails are far from enough – indeed, they can often be counter-productive. Lomax says it’s “more important than ever to be targeted and relevant”. Remarketing – where e-mails are sent to customers who have browsed but not purchased or put into a basket but not bought, will become an increasingly common tactic.

However, Lomax says that in order to avoid becoming an irritation, retailers will have to ensure that these e-mails are either service-based or, if they are sales-based, that they come with an added incentive – a small discount, for example.

Top tips for online success

  • Plan ahead. Grimes says: “Those that need to reorganise the way people shop need to have done it by now. If you need to make a big change, you should have started already.”

  • Make sure call-to-action or “buy now” buttons are centre stage

  • Ensure your delivery processes are customer-friendly. Information about delivery times and returns should be clearly accessible and easy to understand, and items should be sent together wherever possible

  • Don’t forget branding online. Grimes says: “Sometimes when you are shopping online, you can forget what shop you are in because branding is so poor. If you put a thumb over the logo, do you know what it is?”

  • Cross-selling – do it well or don’t do it at all. “A huge number of retailers are really lame in their attempt to cross-sell. Could you think about it intelligently and feed through something that is relevant?” says GT associate creative director Lisa Blythman-Wood.

Source: GT

Trends for Christmas 2008

Toys

Despite the credit crunch, the UK toys and games market is still worth more than£2 billion a year and half of those sales take place in the months of October, November and December. However, because people are only willing to part with their money for exactly the right products, it will be even more crucial to be on top of every trend this year.

The festive season is set to feature a big 1980s revival. According to Woolworths – the UK’s biggest toy retailer – Christmas this year will herald the return of the 1980s classic the Rubik’s Cube, as well as toys from recent cinematic reincarnations Star Wars and Indiana Jones.
Top themes at the Disney Store will include established successes High School Musical and Hannah Montana, as well as Camp Rock, which comes out this autumn, and the latest Disney-Pixar epic animation Wall-e.

Littlewoods Direct is another retailer that forecasts the success of Star Wars spin-offs. The launch of Star Wars – Clone Wars toys will coincide with the release of a series of short animated films at the cinema.

Woolworths’ forecasted Christmas 2008 Top 10

  • Rubik’s Cube

  • Star Wars – Clone Wars Lego

  • Meebas

  • Ben 10 Deluxe Omnitrix

  • High School Musical Sing Together Dolls

  • Bakugan Battle Arena

  • LeapFrog Tag

  • In The Night Garden: Upsy Daisy In Her Bed

  • Indiana Jones Whip

  • Catch Beast

Littlewoods Direct’s Top toy brands for Christmas 2008

  • Camp Rock (new from Disney)

  • Hannah Montana

  • High School Musical

  • Star Wars – Clone Wars

  • Pre-school – Roary the racing car, Fifi and the Flowertots, Mr Men, Hannah’s Helpline and Noddy

Food

Food is the category least likely to suffer. While people will no doubt be cutting back on larger luxury items such as cars, holidays and kitchens, they will be more inclined to treat themselves to an extra bar of chocolate or bottle of wine. As Bishop says: “Each year, the scrums in the aisles of Sainsbury’s, Asda, Tesco, Marks & Spencer and Waitrose seem to get bigger and this year will be no different.”

Hyman adds: “It’s needs, rather than wants, driving spending. Retailers in the needs camp will do better – food is the obvious example.”
However, retailers will give more prominence to value ranges than is perhaps usual. And consumers will be shopping more smartly than ever – perhaps doing the bulk of their shopping at Tesco and then topping up with selected purchases at Waitrose.

But perhaps the biggest Christmas story for food will be how it plays out online. Grimes says: “Food online is growing all the time. It allows people to shop around more. Can you get a delivery at a time you want? That’s going to be the deciding point – the less stressful, the better.”

Bishop agrees. “One of the biggest battlegrounds for grocers will be online. Retailers will have to innovate in their online execution to win the war, finding new ways to tempt online shoppers into higher basket spends, stronger cross-merchandising, tools to help customers plan their feasting, even waving delivery fees based on spend – all these levers will need to be pulled,” he explains.