Retail preparation for Christmas & beyond
Even with the ongoing presence of the pandemic, the Christmas period remains one of the strongest purchasing periods in the Australian retail calendar.
Despite the unprecedented disruptions we have all experienced, the Australian Bureau of Statistics reported that Christmas 2020 retail trade was the biggest on record[i].
The 2021 season is shaping up to be another strong Christmas for retailers.
A consumer survey conducted by Google in May of this year reported that 84% of respondents said that they intend to spend the same or more in the coming Christmas period[ii].
The report also found that 88% of respondents thought that Christmas 2021 will hold the same or more significance for them than 2020. Perhaps the personal strain of the pandemic, associated lockdowns and border closures mean people want to use occasions such as Christmas to express their connection with family and friends.
Christmas purchases are beginning much earlier, with 1 in 5 people thinking about Christmas gifts as early as March, and 4 in 5 doing so before December[iii].
Contributing to this is retailer behaviour that encourages earlier buying.
It is increasingly common to see retailers offering deals and specials earlier in November, as well as participating in events such as Black Friday (26 Nov 21)[iv], and Cyber Monday (29 Nov 21).
Consumers but into pre-Christmas sales
Where the traditional sales day in Australia has always been Boxing Day (retailers offload Christmas stock at low prices) there is no doubt that the once thoroughly American trends of Black Friday and Cyber Monday are becoming huge shopping days here.
In 2019, 71% of Australian consumers reported planning to make purchases during these sales[v].
That year, the month of November saw $3.9 billion worth of sales for products such as gadgets, clothes, beauty products and travel.
77% of Australians have purchased from at least one new retailer in the past year, and most of these have tried more than five new retailers.
No matter the age group they belonged to, Australian shoppers reported doing online research before buying for at least 90% of their in-store purchases in the Christmas 2020 buying period[vi].
The top destination for Christmas gift buying research was Google search, followed by in-store visits[vii].
Immediately following the Christmas shopping period is the summer shopping period, followed by the back-to-school period.
During the summer shopping period, consumers focus on gear to support their summer activities[viii]. Google reports that during this period, consumers also “purchase new items for self and family members”. What this entails is not made clear.
The back-to-school period is self-explanatory with shoes, clothes, bags and stationery having high importance.
It should be noted here that a lot of research highlighting the use of Google as a shopping tool is in fact provided by Google, but with that said we do not see any evidence to contradict their results.
The recent instability has limited our ability to book holidays and accommodation, with many unwilling to risk making plans.
While travel will occur, we could expect that much of this will be within our own state, leading to limited availability for accommodation on the coast and other key destinations.
More likely, day trips, family visits and entertaining at home or local venues will be the norm this season, which could lead to a stronger than normal January for local business.
How should retailers respond?
Much of the discussion above points to significant amounts of Christmas gift research and purchasing occurring earlier.
Regional Manager of Riverina Murray Business, David Yeates suggests that this is not a totally new trend.
David, who has had a long and successful career in the retail sector, said large Christmas gift purchases are usually planned well in advance of the 6-week rush before Christmas day. Parents, and the more organised amongst us, plan for the more expensive toys/electrical devices.
To make these purchases before the big day consumers have been moving away from the traditional lay-by and credit cards, and are taking up buy now, pay later schemes.
Most decisions on the larger items are made well in advance and are driven by well-timed marketing, new release items, or fashion trends.
Christmas marketing plan
David said that it is more important than ever for retailers to have a clear plan of their Christmas stock orders, and a marketing plan from October through to the New Year.
Some helpful prompts to ask yourself at this time of year are what are the hero lines or item leaders, and do I have a stock plan for every week of the Christmas shopping period?
Mastering this process will help into the future with lessons that can be applied to key buying periods.
We have already seen retailers with stock shortages throughout 2021 and Christmas buying will only contribute to this problem.
In the lead up to Christmas, retailers should call on consumers to purchase early to ensure they don’t miss out.
Collecting a customer’s email address for example gives you the opportunity to follow up with them, maybe to get them excited about returning to the store or digital site to purchase follow on items through to Christmas and beyond.
Retailers are facing more competition than ever before.
Increasingly, consumers include competitive pricing and convenience as reasons to look for goods and services online.
It has never been easier to start an online store. In June 2021 it was reported that there were 76,324 online retailers[ix].
Once dominated by specialist online retailers, brick-and-mortar shops are increasingly adopting eCommerce websites and other online sales channels as part of a “multi-channel” delivery model.
The more places you are visible, the more chance you have of a sale.
This is a model that all retailers should at least investigate adopting for themselves. There are many channels available for online selling, be it retail or wholesale, and some may be more appropriate for your product or customer than others.
Online vs offline shopping channels
Broadly speaking, we can categorise sales channels as online or offline, with online being any channel where essentially the customer does not have to leave home to make the purchase. Offline is from a bricks-and-mortar shop, or maybe something like local markets, or mobile vans.
With online channels, the customer is distanced from the product and may find it harder to follow through with a transaction. Offline, the customer has the more familiar full sensory experience of the physical product at the time of purchase.
Online sales channels give you the ability to find a whole new set of customers who can be located pretty much anywhere. On the downside, there is a lot of competition so getting found could take some work.
In addition, with online channels, you are trying to replace digitally, what potential customers miss by not being able to touch see the product first-hand.
Some of the most important ways to mitigate the constraints that the online environment throws up are also the simplest. Having professional clear images of your items and in-depth, accurate product descriptions go a long way to giving your customers enough confidence to click ‘add to cart’.
Advertising your shop online can be cheaper than it used to be. Google and Facebook ads give you the ability to test the waters by allowing control over how much you spend. Testing, adjusting, and re-testing is the key to successful online ads.
Some good, free online tools are available to help market your offline business. Products like Google My Business are almost essential. Anyone who has used Google Maps to find a business has seen first-hand how helpful this service is.
Examples of online sales channels
A website that has products, add-to-cart, and checkout functionality added to it. These require special software such as Shopify or WooCommerce.
Customers typically buy products using a credit card or PayPal, which requires the retailer to open an account with a payment gateway such as Stripe. This is the mechanism for accepting online payments and having them deposited into your bank account.
You can expect to pay monthly subscriptions for eCommerce functionality, and transaction fees are usually applicable for each sale through the site.
3rd-party online sales channels
Popular examples used in Australia include eBay, Amazon, Catch, MyDeal, Redbubble, Etsy, Google Shopping, Facebook, and Instagram.
Each of these will have its own fee structure, but typically they will deduct a percentage of each sale.
Offline sales channels
For most retailers, this will be your own shop front but could be a market stall or mobile vans like a coffee or food van.
Often you are selling an experience as much as a product, so different aspects of your outlet will be more important than others depending on the product or service.
Cleanliness might be key for food vendors, while a modern and inspiring décor is important for fashion or homewares.
Signage, calls-to-action, and window dressings are key elements to attract people in the door but are all too often, poorly done or ignored by retailers. Sometimes less is more.
There is a lot of information available on consumer behaviour, including the growing trend towards earlier planning and purchasing ahead of key periods like Christmas, not to mention increases in spending.
It might be too late to execute some of the longer-term strategies prior to Christmas, but you can conduct research to help decide if it would help your business in time for the next key shopping period.
Maybe a weekly stock plan will save you from running out of your hero products, or a Google My Business listing will give your bricks-and-mortar shop a boost in visibility. Maybe you could even make a foray into your first eCommerce website.
Whatever the case, it is certainly never too late to plan, and whatever stage you are at, we can probably help.
[ii] Google Consumer Survey, Australia, n=787 Australians, May 2021.
[iii] Google Consumer Survey, Australia, n=787 Australians, May 2021.
[vi] Google/Ipsos, Australia, Holiday Shopping Study, n=3152 Australians 18+ who conducted Christmas shopping activities in the past two days, Nov. 2020–Jan. 2021.
[vii] Google/Ipsos, Australia, Holiday Shopping Study, n=3152 Australians 18+ who conducted Christmas shopping activities in the past two days, Nov. 2020–Jan. 2021.
[viii] Google/KANTAR Shopper Pulse, “Digital Summer,” Dec. 2019.