Christmas 2020

It’s been a year like no other and this Christmas will be just as odd. In early December I launched an online survey via Facebook and LinkedIn looking to gauge consumer sentiment on various points of interest. Here are the results:

Background

I got over 200 responses, mainly between 4th and 10th December. The average age was 46 years old and average household size was 3.6 people. Dublin, Meath, Kildare and Wicklow over-indexed making up 49% of respondents with 38% of the population. Munster under-indexed with 12% of respondents but 26% of population.

The big weekly trolley shop

I asked where shoppers were doing their weekly grocery trolley shop at different time checkpoints including last Christmas, Jan-Feb 2020, during the spring/summer lockdown, early December and Christmas 2020. This might not match up exactly with the Kantar data for several reasons.

1. Not everyone does a big weekly shop, some preferring to continually top up. 
2. Some people split their weekly shop between different stores.
3. There is a geographic imbalance in the data with more respondents in the greater Dublin area and less in Munster which will possibly under report SuperValu. 
4. A big trolley full of low value items will not be reflected in the market share numbers we’re familiar with since they are calculated by value, not volume. Equally, a small trolley of more expensive items will have a larger influence in market share terms.

Notwithstanding this, we can see a familiar story playing out in the responses.

• Dunnes won the most Christmas trolley shops last year (they were number one grocer last Christmas, winning 23.6% market share in the 12 weeks to 29th December 2019). Tesco won nearly as many big trolleys but with a lower average selling price will have converted to lower market share (22.0% last year).
• SuperValu gained big trolleys during the Spring/Summer lockdown thanks to their proximity advantage but this seems to have dissipated when restrictions were relaxed. Aldi and Lidl were winning around 18% of the big trolley shops each during lockdown which roughly tallies with their market share by volume.
• The discounters lose some big weekly trolleys at Christmas. Their competitors have larger stores with more options to trade up and treat for Christmas. These larger stores are better able to stock, display and sell the vast quantities of goods that are required to win market share.  They also issue loyalty card vouchers in advance of Christmas, narrowing the value gap to discounters. Shoppers are under time pressure in the week before Christmas so they want a one stop shop. In short, shoppers who want to spend less money 51 weeks of the year and are happy to split their shopping between a discounter and a bigger multiple supermarket, actually look for ways to spend more money and do it in a single location in the week before Christmas. 
• Expect Dunnes and Tesco to increase market share in the Christmas 2020 period as they win big trolleys from Aldi and Lidl.  On the other hand, SuperValu don’t appear to win or lose many big trolley customers for the Christmas shop. 80% of all shoppers do their Christmas trolley in the same store they normally shop in, but the 20% of switchers can be drawn in by strong offers on big ticket items like Whole Turkeys or Guinness slabs. SuperValu perhaps seal their Christmas fate by linking their half-price turkey offer to shopper loyalty in the previous 6 weeks, requiring customers to collect 500 loyalty card ‘points’ in the 6 weeks to mid-December to access a turkey at €2.99/kg. So, what they have, they hold.

Where and How do you intend to shop this Christmas?

No Republic of Ireland respondents intend to do any of their Christmas shopping in Northern Ireland. This is a big change on previous years when up to 10% of respondents did a cross-border trip to buy mainly alcohol and non-food items. Diesel prices and exchange rates are irrelevant this year as ROI shoppers are likely spooked by the COVID-19 numbers in NI. This will make the ROI market bigger this year and will grow sales, especially in the border counties.

• Not surprisingly, 10.6% of respondents are planning an online shop, either for delivery or collection. 11% said that they would order online but that they didn’t want to pay for delivery.
• 15% of respondents are planning to do their Christmas grocery shopping in smaller local stores rather than the big chains. This is great news for independent retailers such as butchers, bakers and greengrocers but it is also good news for the big supermarkets chains who were likely to struggle to manage footfall on the big shopping days.

Favourite Christmas Ad 

SuperValu’s ad with the little boy and his grandad was the most liked by a long stretch. 65% of respondents said it was their favourite, where Aldi’s Kevin the Carrot and Dunnes’ Make Christmas Special ads were the most liked in previous years. SuperValu have definitely captured the moment but does it actually drive any new customers to their stores at Christmas? My research would suggest not many. My view is that these brand ads help show your loyal customers that they’ve made the right choice by sticking with you, its an investment in long-term loyalty. Supermarkets need to be doing something disruptively positive to pull new customers in, or your competitors need to be doing things that are negative, pushing them toward you. That or something seismic like a pandemic turns everything on its head and they win based on pre-existing factors like proximity or online infrastructure.

Product Preferences

I asked shoppers what they were planning to buy more of this Christmas versus last year.

• Different shoppers trade up and treat themselves in different ways. 14% said they planned to buy more brands this Christmas, where 28% said they planned to buy more premium private label. For most of 2020 brands have grown at a higher rate than private label. But remember, private labels are generally less expensive so they could be generating higher volume growth. The momentum is moving towards private label anyway, and in a sign that the economy has already tightened, 10% of respondents said they were planning to buy more ‘value tier’ private label this Christmas.
• Before the pandemic there was Greta Thunberg and Blue Planet. In January 2020 I reported on how the vegan phenomenon had made its way into all areas of food retail and food service. We’ve been focused on COVID-19 19 since then but the momentum continues. 16% of respondents said they were planning to buy more vegan or vegetarian foods this Christmas and 10% were planning vegan/vegetarian options for Christmas lunch, up from 6% in 2019. Plant-based will continue to grow in 2020 as shoppers look to mind their health and the planet, regardless of whether the pandemic ends or not. 45% of respondents said they intend to buy more eco-friendly products this Christmas. 51% are already choosing products with less plastic packaging. 73% said they intend to buy more locally produced products this year. This is brilliant for the local economy and it supports the sustainability agenda by generating less food miles.

What day will you do your big Christmas trolley shop?

The data suggests a familiar pattern with shoppers only really thinking about Christmas groceries once the fresh turkeys and other short-life products go on-sale on 19th/20th December. There are two points of discussion here.  

• The main footfall looks like it will come on 22nd and 23rd December, as it does every year. The problem is that supermarkets will need to implement social distancing this year and lengthy queues might be a real problem. Some supermarkets have already started communicating reminders for shoppers to stick with one person per trolley and use the quiet time and extended hours to avoid the crowds. Managing footfall will be major feature of how retailers perform this Christmas.  
• 31% of respondents were already doing their Christmas grocery shopping, spreading it out to help avoid the big crowds in the final few days. Combine this with the 10% who are shopping online and the 15% who are avoiding the big chains in favour of smaller, local specialists and the picture looks slightly more manageable.

What’s on the menu and who’s coming to dinner?

Christmas is all about traditions, and the pandemic has made these traditions somehow more meaningful, more needed this year. Its no surprise them that 88% of respondents were planning to have turkey of some form for Christmas lunch. 57% will have ham too. All the rest are just supporting actors. Beef, lamb, goose and salmon are planned for 11% of dinner tables combined. The only two other standouts are that vegan and vegetarian options will be on 10% of tables and many smaller households will simply opt for a roast chicken or some nice steak. 

One key difference this year are the restrictions around mixing household bubbles and protecting vulnerable family members. This has had a noticeable impact with 35% of respondents expecting less people around the Christmas dinner table this year. This may turn out to be a higher number since the UK have introduced travel restriction since the survey was done. Regardless, the fact is that there will be a higher number of smaller gatherings this year. The question is whether the retailers have adjusted their orders for more smaller portion sizes? Of the 88% intending to have turkey, 40% are looking for a smaller turkey crown or roasting joint and 48% want a whole bird. But when it comes down to it, shoppers will generally buy whatever is available. So, there might be a lot of households who buy more turkey than they need and end up eating St Stephens Day pie until January 2021!

The ‘Festive Forty’ best value Christmas Shop

I did my annual Christmas price survey using the leaflets, press ads and in-store checks on 20th and 21st December. I surveyed a selection of Christmas essentials across, bakery, fresh produce, dairy, chilled foods, meat, fish, poultry, ambient grocery and off-licence. I targeted a ‘festive fifty’ but found that even core items were not stocked or available in all of the big five retailers. Thus, my list doesn’t include items like poinsettia, salmon en croute or cheese boards and was scaled back to a ‘Festive Forty!’. Prices were collected based on the advertising and shelf edge labels and I tried as far as possible to find comparable items. The actual price was then pro-rata’d to an industry standard weight to correct for minor pack size differences. The potential impact of 16weeks of loyalty card vouchers and Shop & Save vouchers was then subtracted to give a final total.

In summary, Aldi is cheapest at €227.94 without taking into account vouchers. However, shoppers love their vouchers and use them heavily at Christmas. Including vouchers, Tesco comes very close at €228.40. In reality there’s very little difference because the retailers spend so much time monitoring and anticipating each other’s competitive position, especially on the most popular lines. 

COVID-19 Impacts

It’s worthwhile taking some time to understand how the pandemic has already impacted consumer behaviour around shopping and food preparation. Establishing this understanding can help when planning new product development and category strategy for the coming year. Here are the key take-outs:

1. The food service sector and ‘out of home’ consumption has had a horrid time this year. Consequently, 76% of respondents are preparing a lot more food at home and 66% are buying more scratch ingredients for cooking at home. The problem is that the average shopper has a limited enough cooking repertoire and 58% reported that they were bored cooking the same meals every week! This is an opportunity for manufacturers and retailers in the coming year.
2. Looking after our health has been very front of mind this year especially. 56% of respondents said they were eating more healthy foods since the pandemic. 36% disagreed with this statement, though and a similar cohort of 28% reckoned they were drinking more alcohol since the pandemic. Clearly the pandemic, working from home, preparing food with minimal skills and the generally heightened anxiety has driven a section of society into unhealthier habits. But the data would suggest that a majority have been driven toward healthier ways.
3. 28% of respondents were still worried about catching the coronavirus on a supermarket shopping trip. This comes despite the retailers introducing new sanitising procedures, social distancing, mandatory face masks and traffic control systems. This will continue to drive demand for online shopping and it was also highlighted a new competitive territory – ‘safest place to shop’.

Looking Forward to 2021

Its clear that we’re in a third wave and can expect another period of restrictions from Christmas into early 2021. But what are the prospects of some normality later in the year? This depends largely on the effect of the vaccine program.

• 49% or respondents said they would get the Covid-19 vaccine as soon as it becomes available. 21% said they wouldn’t and 31% said they were unsure. Looking at it from the other direction, only 9% said they had no intention of getting the vaccine. Setting aside the early adopters and rejecters, it will be about people feeling sufficiently reassured. The ‘unsures’ will likely row in eventually, and with a phased roll-out they will get the chance to observe the process over an extended period whether they like it or not!
• 88% were expecting another lockdown in 2021 so the introduction of post-Christmas restrictions won’t surprise most people. Again, we see that the people are well ahead of the politicians in their thinking. 73% expect to continue working from home at least some of the time.
• 37% were planning to go on a foreign holiday in 2021. Who know when exactly this might happen, but it does signify an expectation that some normality might return, supported by a vaccine programme that’s expected to be delivered in the first half of 2021.
• 69% of respondents expect an economic recession in 2021.

Wrap Up

Taking all the learnings from 2020 and the insights from this research there are some key take-outs.

1. Supermarket store choice will continue to be driven by habit. It’s only true disruption that can generate real, long-term switching and loyalty. So, in 2021 we can expect to see market share continue to be influenced by variations on travel restrictions and the rules around the food service sector. We can also expect to see ‘safest place to shop’ emerge as a key influencer. And if supermarkets prioritise the value that’s taken in the till over the volume that’s put in the trolley then they will be found out and shoppers will be pushed into the competition.
2. Product choices will be driven by a desire for quality and value for money, whilst supporting local businesses. Expect to see private label sales growing faster than brands, but also be aware that customers can spot when retailers are being disingenuous around value, product origin and their support for local producers. Retailers need to actually support producers, paying fair prices in these times of turbulence around product availability, tariffs and exchange rates. Retailers cannot expect to take the benefits of provenance-based PR without accepting responsibility for their role in a supply chain that can afford all players a reasonable margin. Continuous retail price deflation is not an inevitability, and it reflects a retailer’s ambition for more market share more than responding to a consumer demand. 

Lifestyle choices will drive the continued growth in healthy eating, online shopping, sustainability and new experiences. If your new product development tastes sensational, is good for your health, good for the planet, good for producers and easy to shop and prepare then it should be a winner. 

Malachy O’Connor

Retail Industry Consultant & Director at Food First Consulting www.foodfirstconsulting.ie

Partner at International Private Label Consult www.iplc-europe.com

Partner at Uspire Ltd. www.uspire.co.uk