Retailers prepare for most challenging Christmas in decades

Savvy’s Christmas shopping research reveals that as we enter the final quarter of the year, retailers are preparing for the most challenging Christmas trading environment for decades.

Christmas 2020 is set to be one of the most unusual festive seasons in living memory. As we enter the golden quarter it’s difficult to believe that this time last year we hadn’t even heard of Covid-19, let alone considered lockdown, face mask wearing and toilet roll rationing. But as they say, a year’s a long time in retail.

We have talked to shoppers about how they are feeling about Christmas 2020 and how they are planning to approach it – we expect that shopping will start earlier and plans for families will be adapting the closer we get to the big day. We are sharing our findings so far, which make for interesting reading.

Key findings

Value mindset

With the furlough scheme winding down, unemployment increasing and a broader feeling of uncertainty, we find shoppers enter the ‘golden retail quarter’ with a highly value orientated mindset.

Four-fifths (81%) of shoppers told us that value will be more important to them this year, while 68% say they will budget more carefully. In particular, we find that shoppers are planning to focus their present buying on those closest to them, with 29% saying they plan to cut back expenditure on presents for more distant family and friends.

In some good news for retailers, our research suggests shoppers will start shopping for Christmas presents earlier this year as they seek to spread the cost. 68% of shoppers expect they’ll start buying earlier.

We forecast a bumper Black Friday, with most retailers set to extend the promotion across at least a week – many under ‘cyber week’ and ‘cyber month’ banners. In our survey, 46% of shoppers say they plan to do more shopping on Black Friday, compared to 2019.

Subdued spending on food and drink

While food and drink retailers are likely to benefit as consumers cut back on eating and drinking out, 60% of shoppers plan to cut back their expenditure on food for Christmas Day.

Discounters Aldi and Lidl stand to have another outstanding Christmas, with 64% of shoppers saying they’ll spend more with them this year. 12% say they will do their main Christmas shop at Aldi, while 8% will do so at Lidl.

A record number of households are likely to be cooking Christmas lunch this year because of the rule of six. But whether that will translate into record turkey sales is yet to be seen, as many may opt for alternative meats, given they’ll be cooking for fewer people.

Challenges for high streets intensifying

The challenges faced by high street retailers are set to intensify as more shoppers turn to online shopping this Christmas. Three-quarters of shoppers expect they will visit high streets and shopping centres less this year when buying presents, compared to 2019. Any further tightening of COVID-19 restrictions could make matters worse.

The online shopping boost will, in large part, be driven by a growing number of shoppers browsing and ordering using their smartphones. 63% of shoppers say they’ll order more presents using their smartphones this year.

The outlook for bars and pubs is particularly tough. As well as dealing with the challenges of managing social distancing and restricted opening hours, we find that only 36% of consumers think they will visit a pub or bar during the festive period.

Not all doom

Following a difficult year and the prospect of many families spending Christmas day apart, shoppers are keen to keep their spirits up. 85% think they’ll enjoy Christmas, even if only six people can spend the day together, and 67% say they want more inspiration this year to help make Christmas extra special.