How to Engage Consumers This Festive Season

While Christmas is the most wonderful time of the year (according to Andy Williams), it is also the most important time of the year for retail brands.

But after a rollercoaster couple of years, and with 2021 the year in which COVID-19 finally killed off some of our most-loved brands, what’s in store for retailers this festive season? We’ve taken a look at some of the key statistics and trends in retail shopping habits and furnished you with tips and tools to help you capitalise on these trends and make the most of the upcoming festive period.

Retail Ho Ho’s No No’s

The last two years have hit the retail industry incredibly hard. Thanks to the coronavirus pandemic, retailers have had a challenging time, with stores closed, staff furloughed and supply chain issues. At the same time, multiple lockdowns caused a significant shift away from the high street to e-commerce.

Research from the ONS, published earlier this year, revealed the extent of the changes wrought on the retail sector: in 2020, total retail sales volumes fell by 1.9% compared with 2019, the largest annual fall on record. However online sales rose to a record high of 33.9% as a share of all retail spending, the highest growth seen for 13 years, according to e-tail association IMRG.

More than 8,700 British chain stores closed in the first half of 2021 and while some brand names have disappeared from the high street forever (goodbye Topshop, Debenhams and Thorntons), some brands – especially those with a strong e-commerce presence – have thrived, especially the “Big Four” supermarkets, Amazon, Marks and Spencer and Boots, according to Statista.

Where and How are Consumers Spending?

But it looks like consumers are planning to buck this trend in 2021: Statista research shows that in the 2021 holiday season, the average Christmas spending on gifts in the UK was higher compared to the previous two years. UK consumers were expected to spend the most on consumer electronics, at around £51 in 2021, compared to £49.20 in 2020. Compared to the previous year, per capita spend on clothing and footwear saw an increase in 2021 going from £26.94 to £38.79, although this is still far below the levels observed in the pre-pandemic period.

Research from Canopy Media shows that the pandemic also affected how people shopped for gifts in 2020. The number buying online grew to 85%, up from 78% in 2019, while, due to a mix of store closures and consumer concern, the number shopping in-store dropped from 77% in 2019 to 58% in 2020.

When are Consumers Shopping?

New research from Kantar’s GB Target Group Index (TGI) consumer data has found that 21% of adults (over 11 million people) are planning to start their present purchasing in November. Kantar also found that, amongst the November Christmas shoppers, 44% of them (5 million people) buy Christmas presents for six or more people. November Christmas shoppers can also prove to be a lucrative group in their gift purchases: the data shows that well over half of them (55%) claim to usually spend £200 or more on Christmas gifts, compared to just 37% of those who start their Christmas shopping in December. This means that now is a key time to engage consumers with products and services that will be gifted during the festive season.

Christmas Shopping Trends

Social media

The likes of Facebook, Twitter, Instagram, Tik Tok and Pinterest account for approximately 60% of all Gen Z and Millennial holiday purchases.

Sustainability

Nearly 70% of Gen Z and Millennials are actively looking to engage with brands both online and in-store that have a clear sustainable mission. Gen X is not far behind, with 59% seeking out ethical brands. For more on Green consumers view our Green Paper.

Pet preferences

After the ‘pandemic puppy’ boom, it will come as no surprise that 64% of pet owners have said they will be buying presents for their furry friends. For more pet specific marketing data visit our page.

Shopping the sales

In 2020, consumers used incentives like Black Friday (39%), Cyber Monday (24%) and Amazon Prime Day to bag their bargains. In 2021, Klarna expects that figure to increase to 72% of shoppers who will rely heavily on similar incentives, seasonal sales and offers to stretch their budgets.

Gifting

81% of shoppers expect to buy for family, while nearly half plan to purchase gifts for friends (44%). 34% will shop for their significant other, while a mere 7% plan to shop for work colleagues.

Self-care

43% of Millennials and 38% of Gen Z plan to buy gifts from their wish lists for themselves if they don’t receive them from others, up from last holiday season, when 41% of Millennials and 32% of Gen Z said they purchased gifts for themselves.

Wisdom of the silver surfers

55% of Baby Boomers are more inclined to forgo participating in holiday sales altogether, but Klarna’s silver surfers are still savvier than most. Older Klarna shoppers are much more likely to take advantage of the holiday deals than the average Joe, with only 43% of Klarna Baby Boomers saying they won’t shop sales.

How We Spend It

While we’re feeling more excited about the first ‘normal’ Christmas since 2019, a number of factors are stretching the purse strings: personal finances are under pressure, unemployment and inflation are both on the rise; and cost of living is expected to go up in 2022. New research from VoucherCodes and GlobalData has found that, while consumers feel stretched financially they also want to make this Christmas extra special. As a consequence, many admit to being more inclined to rely on loans than their earnings to finance Christmas gift spending this year. In 2020, consumers expected to finance 75% of their Christmas gift spending via their earnings, compared to 62% in 2021. This year, people anticipate relying on credit cards, store cards, loans, and payday loans more than in 2020.

Data – Your Helpful Christmas Elf

It is no secret that early to mid-November is the best time for direct mail (DM) campaigns during the festive period. And with the right data at their disposal, brands can further optimise their campaigns to reach the right consumer at the right time. And as we’ve seen, bricks and mortar is far from being obsolete: with the right planning and analysis of customer data, brands can drive footfall and traffic over typically quieter times with incentives or offers. With more than 44% of consumers purchasing presents for six people or more, they’ll be keen to make the most of incentives and sales.

But not only that, retailers need to ensure they are embracing a more omnichannel model. Klarna’s omnichannel research found that retailers’ main motivation when it comes to developing a more omnichannel approach is to better understand customers, but other factors also came into play.

Build a Winning Strategy

Consumers’ buying habits are changing, making it an optimal time to tap into new opportunities. Brands must take the insights from the past year and use them to build a winning strategy. Getting personal with consumers with tailored, relevant and timely communications and marketing will not only drive engagement but also optimise return on investment (ROI) and long-term value (LTV).

With access to a data asset repository of multiple, trusted sources of consumer data, brands can build an accurate, in-depth, and insightful view of the consumer population in the UK. By understanding who consumers live with, what they earn and spend, how they transact and what their hobbies are, for example, they can gain huge customer insight, enrich their marketing comms, build profiles and personas and select the appropriate recipients for their campaign.