Key themes for Christmas 2020
18 December 2020
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We have a larger note on the reflections from Black Friday for Food to come in the next day or two, alongside retailer by retailer views for Christmas also.
Then we'll review the event and see what is lurking in the shadows for January, of course, we have the pandemic, the government changes to rules and lockdowns across the nations and then, Brexit, to contend with as well.
Truly remarkable stuff.
In terms of Christmas; there are 7 headline points I want to share before we get in to the Veg pricing....
1) Tier 3 - Because a number of areas are now in tier 3, and indeed, only Bristol / N Somerset came out of tier 3, with Herefordshire going to tier 1. It means that hospitality is battered, that impacts retailers too of course, with in store Cafe's generally able to do a fair old trade in the run up to Christmas.
But is also means that stores will pick up trade, given that the meal out has disappeared as a possibility for so many, if those people were hanging on for the news of any tier changes yesterday.
However, it's a challenge because if customers have waited, they've missed the pre order deadlines for Turkey etc. Unless they hedged their bets.
2) Spending - Whilst the recession is imminent and value will be ever so important in 2021, there's a degree of confidence in the theory that customers are spending more this year to celebrate the end of a dire year, household debts have reduced as customers have saved, either by being on furlough or indeed, being at home and then may look to spend more this Christmas.
That said, we should also remember that for other customers, they have had no help via the government, seen businesses close, or have lost their jobs overnight. For them, things will be very different, so balancing up these missions in store, is vital.
Christmas decorations were put up in November by a huge number of customers and we visited one B&M, where they'd sold out of Christmas decorations by and large (improving the margin) but also, they were 'essential' so were able to stay open in the November lockdown.
3) Hosting - It's a huge part of Christmas and not being able to see the in-law's is perhaps one unintended happy consequence of COVID, but in all seriousness, the hosting element throws the traditional missions up in the air. More customers are likely to be shopping and those who are, may well be looking for easy solutions as they either, don't cook with any confidence and/or don't really like cooking. The absence of hospitality and indeed, gatherings being restricted several means prepared veg, boneless turkey breasts and the like are more important, than ever this year.
That makes is harder for retailers of course, who buy well in advance, but all retailers are strong in the arena of prep and premium also. M&S Food should be well set up given their historic strength on ready meals and prepared foods but also, the number of customers who do 'trade up' for Christmas.
4) Trade up and premium -That said, the 'trade up' mission may well be tapered somewhat this year because, if you're hosting but now don't have to, you may well look to somewhere like Aldi. who do a brilliant job on quality but still have a stigma around their Biscuits being given out, versus a brand (although brands are available in Aldi...)
5) Safety - The only time safety would have ever come up as a consideration for customers, when thinking about where they shop is possibly, at a time of heightened terror alerts. Even then, it's unlikely to influence where one shops... Therefore the fact it was 4th highest priority (as Sainsbury's quoted on recent results) for customers says a huge amount, and as ever, there are numerous ways to look at this.
i) If you think about safety, a queue is actually a positive thing for customers to see as it shows that the store is managing the numbers in stores, meaning that customers are forced to wait their turn.
ii) Conversely, no queue outside a store is a positive, but that turns in to a huge double negative if you then walk in, and the store is like a nightclub at kicking out time. Car park traffic flow and the number of spaces will be a huge marker for this.
iii) The challenge with the Winter is that it's cold and customers queuing outside is not great, people driving in may well turn around and drive to a nearby supermarket that is quieter, or flip their spending elsewhere. Equally, the trade pattern will be uneven, given social distancing and people choosing to spread their shopping around and also, at differing times of the day.
It's also likely that many customers have bought earlier and frozen some of their products also.
6) Technology will play a part, Aldi and Tesco have traffic lights at the store doors to manage queues, Home Bargains have also adopted this technology. Queuing apps are in use for Asda and Sainsbury's, alongside Waitrose. Customers use the app when they arrive and only get out of the car when their turn is imminent.
M&S have similar tech, linked to their loyalty card, where slots are booked in the same way as if you have pre ordered your food.
7) It will be a very different Christmas in terms of trade pattern and the hosting elements, alongside COVID and hospitality closures. It's likely, given the above that c-store operators like the Coop will be taken more seriously for a wider shop this year, rather than the 'last minute bits' or 'can you go to the Coop, she's vegetarian and I haven't got enough' etc.....
Quality is key at Christmas and the Coop are well set to benefit, they have picked up a fair amount of trade with lockdown and their performance on Kantar has shown that this has been sustained too.
The Veg wars are well known at Christmas and indeed in Ireland, the prices were as low at 9c which prompted protests one year...
For the UK; we have seen 15p before, but usually nearer Christmas. The price points are always keen across the market for those key Veg lines, Morrisons run a 3 for £1 deal on larger packs and Tesco et al offer prices from 29p.
More recently, M&S joined in with a deal at 40p and Sainsbury's, who often shy away joined the action last year too with lower priced Veg.
This year, the leaflets from Lidl advertising their Christmas wares didn't feature a price on the Veg, advising customers to see in store. Well, as they landed this week, they were in at 15p on the Carrots, Brussels, Parsnips and Mini Roasting Potatoes are all at rock bottom prices.
Aldi have stuck their deals in at 14p, undercutting Lidl by 1p and it's likely they will now be price matching in any case, but whether they go lower is another question.
It's a balance between value but also, not harming farmers. Even the 15p price point raises questions about the price the farmer gets for his produce...
Tesco are in the mix too, this was one of their lowest prices too. Typically, they're at 29p and often push their farm brands out via this mechanic. But not this year, they've gone for a more rounded Tesco own label approach, with some farm brands featured for good measure.
Their festive five was one of the first markers Dave Lewis put down when competing with Aldi and Lidl, and this has been largely replicated across the market. More to come as we get it on this regard, as it's a fair gauge of how competitive things may be......
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From the Grocery Insight newsletter archive, first sent to subscribers on 18 December 2020. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.